Your Resource for Everything on Mortgage Loans Since 2003
Due on Sale, Demand and Acceleration Clauses
It is imperative to closely examine your mortgage or loan contract before agreeing to it or signing it. The language may seem difficult, and at times impenetrable, but when your money is what's at stake, it is extremely important to understand what you are agreeing to by signing your mortgage contract. The Truth in Lending Act was signed into law for the explicit purpose of making lending arrangements and terms extremely clear to the borrower. One of these terms is the existence of a "demand feature." Pay special attention to this detail on your mortgage or loan contract before signing it.
There are three types of clauses that could potentially fall under the category of a "demand feature." If your loan or mortgage contract states that it does have a "demand feature," then you need to find out exactly what kind. The simplest is the acceleration clause. This clause stipulates that in the event you violate a contractual obligation, the lender has the right to "call" the loan demand its payment in full immediately.
The next type of "demand feature" is the due on sale clause. The purpose of this clause is to protect the lender against rising interest rates. If you were to sell your house to a new individual and pass the loan onto them, the lender might be losing money if interest rates have been raised since the mortgage was taken out. Thus, a due on sale clause stipulates that you must repay the loan in full when selling the home. This way, the lender can rearrange the loan with the new homeowner and reap the benefits of higher interest rates.
The final type is known simply as the demand clause, and this means that the lender can demand repayment of the loan in full at any time for any reason. This clause gives the lender the same powers as the acceleration and due on sale clauses, but also allows the lender to raise interest rates even if you aren't selling your property. The lender may even force the borrower to agree to a rate hike by threatening to call the loan. These practices may not be ethically sound or even legal, but all borrowers need to be aware of them in case the lender attempts them. Be sure to check your mortgage contract for any demand features before signing and discuss them in full with your lender.
And, if you're interested, here is an interesting blog about Foreclosures.
National Refinance Rates
-
-
FHA Loan Orientation Guide
Use our FHA Guide to find answers to all questions related to FHA loan.
- Choosing Surety Bonds for Your Home Renovation
- Is Your VA Home in a Flood Zone?
- What Mortgage Payment Can You Afford?
- More on FHA Refinancing and Avoiding Foreclosure
- Lender Programs to Help You Keep Your Home
- Ignore Teaser Rates, Learn about FHASecure
- Better to Rent or Own a Home?
- Risk Based Premiums
I hate viewing over optimised , key phrase stuffed webpages web sites or weblogs. As you say great for search engines but not for real people.
Reply»Hey, I attempted to e-mail you pertaining to this post but aren?t able to attain you. Please e-mail me when get a moment. Thanks.
Reply»Very nice work :)
Reply»Many landlords will need to verify your references. Telephone forward to alert attainable references, including your former landlord, that they could obtain a call. Acquire some info to current to landlords/leasing brokers ? they'll in all probability ask for it, anyway. This should embrace a credit examine, a resume and pay stubs or tax returns.
Reply»I gone through this site i found some interesting topic and it follows that the transaction of the loan details and selling and purchasing details. For more information goto.............united first financial
Reply»