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?
- Veritas gOio56Depends 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.
- New incognltoPrepayment 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.