medium · National Real Estate Exam financing
Under the principle of 'hypothecation,' the borrower retains possession of the property while the lender holds a security interest.
How do points relate to this concept?
- Points are part of the consideration the borrower pays for the use of the lender's money
- Points are the legal mechanism that formally creates the lender's lien on the property
- Points guarantee the borrower will never be required to repay the principal balance owed
- Points allow the lender to take physical possession of the mortgaged property earlier than agreed
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