A due-on-sale clause in a mortgage requires that:
Correct Answer
C) The full loan balance becomes due if the property is transferred
A due-on-sale clause (also called an acceleration clause) requires the borrower to repay the entire remaining loan balance when the property is sold or transferred. This prevents a buyer from assuming the existing loan without lender approval, protecting the lender's ability to adjust terms to current market conditions.
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A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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