When is a due-on-sale clause inserted?
Answer:A due-on-sale clause is added by lenders to a mortgage agreement to prevent house sale and mortgage assumption to a buyer who may become a delinquent borrower. The due-on-sale clause demands that the loan becomes due in full if the property is sold to unapproved purchaser without expressed consent of the lender.
Many times a buyer would like to purchase a house with the existing mortgage (that is, assume the mortgage) to preserve the low interest. If rates are high, assuming a mortgage may be the best way to become a homeowner.
The only mortgages that never had a due-on-sale clause and were always assumable are the FHA and VA insured loans. Nowadays, FHA and VA mortgages can be all assumed by approved borrowers.
Even if trying to sell the house without the lender knowing can be risky, it is not illegal. If you want to transfer your mortgage to someone else, the lender may decide to call the loan according to the due-on-sale clause. However, not all lenders will do that. Also, you could try to negotiate the mortgage assumption with the lender for a fee.
Final piece of advice: Monitor your credit report and score regularly, to ensure there are no inaccuracies or unauthorized activity. Your credit report and score are the two major methods that creditors and lenders use to make a credit decision about you. Higher scores usually mean lower interest rates, which will save you money.
See All 3 National Credit Scores & 3 Reports Instantly, Online & Free!
| Not at all | Definitely |
Mortgage QnA is not a common forum. We have special rules:
- Post no questions here. To ask a question, click the Ask a Question link
- We will not publish answers that include any form of advertising
- Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
Common misspellings: mortage and morgage