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A due on sale clause is a clause found in a contract, or often in promissory notes, that grants the lender the right to fully recall the loan or what’s left of it in balance when a sale of the property or transfer of ownership occurs.

While the lender retain this right to demand full repayment of the outstanding balance, the lender is also under no obligation to do so.

As observed in the real world, many instances of creative financing techniques like owner financing and mortgages being assumed occur without lenders triggering the due-on-sale clause. read more

Points refer to upfront cash payments that lenders require from a borrower as part of the costs of accepting the loan. It is usually expressed as a percentage of the loan amount.

For example, 2 points refers to 2% of the loan amount.

Sometimes when points are paid on a loan by a lender when the rate is above the zero point loan rate. This is described as negative points. read more

A promissory note is a legal agreement in which one party (issuer) promises to pay a specified sum of money to another party (payee) on a future date or on the payee’s demand should certain conditions be met.

Sometimes also referred to as a note payable, the promissory note is a debt instrument and would include material information such as:

• Date
• Legal names of people involved in the agreement
• Principal amount
• Interest rate if applicable
• Terms of repayment
• Maturity date if applicable

It is basically a promise put into writing with legal repercussions when the promises are not kept. read more