Finance
A Wyoming lender uses a 'due on sale' clause. This clause means:
AThe loan interest is due when the property is sold
BThe entire loan balance becomes due and payable when the property is transferred✓ Correct
CThe lender must approve all loan assumptions
DThe buyer must pay the down payment before closing
Explanation
A due-on-sale (acceleration) clause requires the borrower to pay the entire remaining loan balance upon sale or transfer of the property. It prevents buyers from assuming loans without lender approval.
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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.
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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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