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CYA- Due On Sale

Some important terms of a loan agreement

A few years ago, only the richest people used to invest in real estate. Now however most of the middle class people are stepping into this market. They do not need to invest all the money right away. All they need is a small part of the total value in form of the down payment and the rest they can get through a loan. And they best part is that the property they are about to buy can act as a security. So, they need exactly nothing extra. Many of the people even rent out the property and then use this money to pay the installments. It thus is a really nice plan for those who want to create a big estate from their regular job.

If you too want to do the same, you should know about some of the terms of this type of loan. The most important one is the due on sale clause. According to this, all the due will be considered paid in full if or when the property is sold. This means that is the borrower wants to sell the property while the loan still stands, he should either pay the amount if full from the money he gets from the deal or transfer the loan to the new buyer. In any case the actual buyer who took loan will be free from it. This clause is added to every loan agreement these days. It is beneficial for both the lender and the borrower.


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