Finance
A North Dakota lender 'calls' a loan, demanding immediate full repayment. This most likely occurs because of a(n):
AAcceleration clause triggered by default✓ Correct
BMutual agreement between buyer and lender
CDrop in interest rates
DLender's annual review of all loans
Explanation
An acceleration clause in a mortgage or deed of trust allows the lender to demand the full outstanding balance immediately upon certain triggering events, most commonly a default on payments or a sale of the property (due-on-sale clause).
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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