Finance
A Wyoming commercial loan that includes a 'due-on-sale' clause means:
AThe loan must be repaid immediately from sale proceeds
BThe entire outstanding loan balance becomes due when the property is sold or transferred✓ Correct
CThe lender can demand payment when the property value declines
DThe loan rate increases to market rates when the property is sold
Explanation
A due-on-sale clause (alienation clause) requires the outstanding loan balance to be paid in full when the property is sold or transferred. This prevents buyers from assuming the loan without the lender's consent and allows lenders to reset the rate to current market levels.
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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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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.
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