Question

An acceleration clause gives the lender the right to?

1) demand the entire balance owed due and payable upon default.
2) adjust the amount of payments if interest rates increase.
3) increase the interest rate upon assumption.
4) charge a prepayment penalty if the loan is paid off before maturity.

Answer 1

An acceleration clause gives the lender the right to demand the entire balance owed due and payable upon default.

Step-by-step explanation:

An acceleration clause gives the lender the right to demand the entire balance owed due and payable upon default. This means that if the borrower fails to make timely payments or otherwise defaults on the loan, the lender can require the borrower to immediately pay off the entire outstanding loan balance.