Need info about pre payment penalty in mortgage.

Qualcomm NotInQ
Mar 9 6 Comments

I read about pre-payment penalty in house mortgage, not quite sure I understand it correctly. Does it mean banks will charge a fee if I make Extra payments everymonth or make an additional payment once per year ? Anything particular language to watch out for when I close?

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TOP 6 Comments
  • Veritas gOio56
    Depends on the lender and the loan. We specifically went with a lender that had no prepayment penalties. Most of the big lenders don’t have them any more.
    Mar 90
  • Facebook person52
    I think prepayment penalties are pretty rare these days. They can vary. You'll just have to read up on your particular loan.
    Mar 90
  • Joyent / Mgmt
    A Mouse

    JoyentMgmt

    PRE
    IBM
    A Mousemore
    Ask specifically before you close if there are prepayment penalties. In most cases there won't be. But get it in writing to be sure.
    Mar 90
  • Oracle now@google
    I never encountered these and never had problems paying early. If there are any, they should be explicitly stated in the loan papers.
    Mar 90
  • Prepayment penalty is a special fee. It is rare, but you should clearly know what is the amount. Those borrowers that have it will have to pay it in addition to what they would have to pay for principal and interest when mortgage is paid off earlier. In practice, this means that there is extra cost to refinance or to sell the house.
    Mar 90
  • Qualcomm FindingN
    Thanks everyone for the info. More confident now.
    Mar 100

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