Finance
In Michigan, 'assumable' mortgages allow a buyer to:
AAutomatically qualify for any mortgage the seller had
BTake over the seller's existing mortgage with lender approval, keeping the original interest rate and terms✓ Correct
CAssume the seller's mortgage without any lender involvement
DTransfer the mortgage to a third party without closing
Explanation
An assumable mortgage allows a buyer to take over the seller's existing loan (with lender approval) at the original interest rate and terms, which can be advantageous if current rates are higher than the existing loan rate.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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