Call Option

A call option is a clause in a mortgage contract that enables the lender to ask for the outstanding balance at any period in time. The clause gives the lender the option to call you for their money. For example, you are in the market for a home mortgage, but your credit history is less than perfect. You shop around for a home loan but have trouble finding one. Finally, you find a lender who is willing to provide you a great rate on your home mortgage, but there is one condition. The lender wants a call option in the contract. The call option allows the lender to revoke your mortgage at any time. This is an option that the finance company uses to call for their money back. Call options usually have an expiration date and are commonly used in stock trading and the lending industry.