A Florida seller wants to carry back a second mortgage but is concerned about the due-on-sale clause in the existing first mortgage. What should the real estate licensee advise?
Correct Answer
B) The seller should consult with the first mortgage lender about the transaction
Correct: The seller should consult with the first mortgage lender as due-on-sale clauses may be triggered by seller financing arrangements. Why not A: Due-on-sale clauses are generally enforceable. Why not C: Second mortgages don't automatically trigger clauses but may depending on terms. Why not D: Both parties should be concerned about potential acceleration.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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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