Residential Mortgage Application: The Acceleration Clause

When you are filling out a residential mortgage application, there are a lot of different terms that you are going to need to look at. One of those terms is the acceleration clause. Here is what you need to know about the acceleration clause.

Acceleration Clause

Many mortgage contracts have an acceleration clause built into them. This means that the lender has the right to accelerate the loan payments and demand repayment of the loan. Typically, you have to do something in order to trigger the acceleration clause. If you trigger the acceleration clause, you will have to come up with the money to pay off the entire loan amount all at once.

Triggering the Clause

Most of the time, you will trigger the acceleration clause if you miss a certain number of payments. For example, if you are late on two payments, the acceleration clause might come into effect. Your lender would then let you know that you have to pay off the entire loan all at once.

What to Do

If you trigger the acceleration clause, there are a few different things that you can try. You could refinance your loan, sell the house or try to negotiate with your lender to get back on good terms with them.

blog comments powered by Disqus