First-Time Home Buyers FAQs: What Is an Acceleration Clause? (2024)

FAQs

First-Time Home Buyers FAQs: What Is an Acceleration Clause? ›

An acceleration clause is a provision in a loan agreement that allows the lender to require the borrower to immediately repay all of their outstanding loan if certain conditions are not met. It is, essentially, a protective measure for lenders.

An acceleration clause allows the lender to require payment before the standard terms of the loan expire. Acceleration clauses are typically contingent on on-time payments. Acceleration clauses are most common in mortgage loans and help to mitigate the risk of default for the lender.

An acceleration clause is a provision found in some real estate contracts that allows a lender to demand that you repay your entire loan balance if certain conditions are (or aren't) met.

An acceleration clause is activated when the borrower fails to make their mortgage payments (or meet other terms of the loan) and is thus required to pay off the remaining loan balance.

Most commonly, the seller or lender benefits from an acceleration clause in a real estate contract. An acceleration clause can also benefit any real estate investors who have financial interests in the property. An acceleration clause helps manage the risk of lending money.

The presence of an acceleration clause provides lenders with an additional level of security, as it allows them to mitigate potential losses by requiring borrowers to repay the loan immediately in the event of a breach. This provision helps lenders maintain control over the loan and protects their financial investment.

The acceleration clause, true to its name, accelerates the mortgage repayment schedule. It will force you to repay the entire balance of your loan, plus accrued interest, in a single payment, under certain circ*mstances. These circ*mstances are specific actions (or inactions) on the borrower's — that is, your — part.

A mortgage accelerator loan is a mortgage program that purports to help the homeowner pay their mortgage off at a faster speed than a more traditional loan. The appeal of this kind of loan is that faster repayment means that money is saved in the form of less interest owed over the life of the loan.

The difference is that a due-on-sale clause is triggered when you sell or transfer your property without the lender's consent, whereas an acceleration clause goes into effect when you miss mortgage payments, file for bankruptcy or fail to fulfill your loan requirements in some other way.

In a mortgage contract, an "acceleration clause" is a provision that permits the lender to demand that the borrower repay the entire loan after a default. An "acceleration clause" in a mortgage or deed of trust allows the lender, or current loan holder, to demand repayment in full if the borrower defaults on the loan.

What are the exceptions to the acceleration clause? ›

There are exceptions to this clause's enforcement, including death, divorce and other mortgage situations. An acceleration clause also invokes the borrower to repay their loan balance in full but as a penalty for violating the loan's terms.

An 'Acceleration' clause most nearly means to speed up payment of an overdue debt. This clause is often found in loan agreements or contracts and allows the lender to demand immediate repayment of the entire outstanding balance if certain conditions are met, such as missing a series of payments.

In it, a borrower will: re-affirm its obligations under the loan documents, consent to the lender's application of the payment received (including default interest and legal fees), acknowledge that the obligations that were created at the time the loan was accelerated are now reinstated and.

An acceleration clause in real estate is a provision in the loan documents that allows the lender to demand full and immediate repayment of the outstanding mortgage balance (in addition to any accrued interest since the most recent payment) when a borrower breaches the loan agreement.

An accelerated clause is typically invoked when the borrower materially breaches the loan agreement. For example, mortgages generally have an acceleration clause that is triggered if the borrower misses too many payments.

Even if the instrument is subject to an acceleration clause, as long as a specific date is otherwise named, the instrument is still negotiable. An acceleration clause allows the obligee to declare the full amount due and payable upon the occurrence of a particular event, such as the failure to make a payment.

The acceleration of the body is directly proportional to the net force acting on the body and inversely proportional to the mass of the body. This means that as the force acting upon an object is increased, the acceleration of the object is increased.

acceleration, rate at which velocity changes with time, in terms of both speed and direction. A point or an object moving in a straight line is accelerated if it speeds up or slows down.

An 'Acceleration' clause most nearly means to speed up payment of an overdue debt. This clause is often found in loan agreements or contracts and allows the lender to demand immediate repayment of the entire outstanding balance if certain conditions are met, such as missing a series of payments.

In popular speech, an object is often said to be accelerating only if it is speeding up. In physics, however, an object is accelerating if its velocity—speed plus direction—is changing, whether increasing or decreasing. If an object increases its velocity, it has positive acceleration.