Question

In a mortgage loan, the borrower always creates two documents: a note and a mortgage. Which of the following pieces of information is provided in the mortgage?
A. How the interest rate is to be computed.
B. Whether the borrower has the right to prepay the principal during the term of the loan, and any prepayment penalties that would be incurred as a result.
C. Whether the borrower is released from liability for fulfillment of the contract.
D. Whether the lender has the right to accelerate the loan, requiring the borrower to pay it off, in the case that the property is sold prior to the term of the loan.

Answer 1

Answer:

The answer is: D) An unambiguous description of the property that is being pledged as collateral for the loan.

Explanation:

A mortgage is a legal agreement the borrower makes with a financial institution (e.g. bank, credit union) to get a loan and uses real estate as collateral. Since the collateral is a very important part of the mortgage, it has to be properly registered, appraised, and the contract must contain a detailed description of the real estate used as collateral.