Mortgage Acceleration Clause:  A clause which allows a lender to demand that the entire balance of the loan be repaid in a lump sum under certain circumstances. The acceleration clause is usually triggered if the home is sold, title to the property is changed, the loan is refinanced or the borrower defaults on a scheduled payment.

The acceleration clause can also be used to spell out some of the common terms of compliance of the loan, while outlining the consequences that will ensue if the terms are not honored. As an example, the acceleration clause may specify the due date of the payments, and also include a list of steps the lender will take in order to penalize the borrower for late payments or failure to pay at all. This may include the application of a fixed amount if the payment is not paid within a specified time after the due date, all the way through termination of the loan and demand for full payment.

Before signing any type of loan or mortgage agreement, it is always a good idea to look through the agreement and read all points addressed in the acceleration clause. While the majority of agreements contain very reasonable terms within the acceleration clause, it is important for the borrower to check for any points that may be an issue down the road. Failure to read the document before signing will not free the borrower from the responsibility to abide by the acceleration clause or deal with the terms of recourse that are afforded to the lender.