Finance
A mortgage assumption allows a buyer to:
ATake over the seller's existing mortgage and its terms
BObtain a new loan using the seller's credit history✓ Correct
CPurchase the property without any down payment
DDelay the first mortgage payment for 12 months
Explanation
Mortgage assumption allows a buyer to take over the seller's existing loan, including the original interest rate and remaining balance. FHA and VA loans are typically assumable; most conventional loans include a due-on-sale clause that prevents assumption.
People Also Study
Related Tennessee Questions
- A buyer submits an offer with the financing contingency: 'This contract is contingent on the buyer obtaining a 30-year conventional mortgage at no more than 7% interest for 80% of the purchase price.' If the buyer qualifies for a 7.25% rate, the buyer may:Contracts
- A Tennessee investor finances $180,000 at 7% annual interest with monthly payments of $1,198. After the first payment, what is the remaining loan balance (approximately)?Real Estate Math
- A 'due-on-sale' clause in a mortgage or deed of trust requires that:Finance
- A mortgage in which the interest rate is fixed for the first 5 years and then adjusts annually is called a:Finance
- The annual percentage rate (APR) on a mortgage is HIGHER than the stated interest rate because it:Finance
- Private mortgage insurance (PMI) is canceled automatically on a conventional loan when the loan-to-value ratio reaches:Finance
- In Tennessee, a 'due-on-sale' clause in a mortgage means:Contracts
- In Tennessee, a 'release clause' in a mortgage allows:Contracts
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.
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.
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.
Math Concepts
Study This Topic
Practice More Tennessee Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Tennessee Quiz →