A fee that lender charges home owners if they pay more that is required on a monthly loan payment, or pay off the loan before its term ends
Loans with a prepayment penalty usually have a lower interest rate. But, in exchange for what seems a sweeter deal, you’ll be slapped with a whopping penalty of up to 3% of your loan’s amount if you decide to pay off the loan on your home, or refinance within the first 3 years of buying your home.
The penalty also applies if you pay more than 20% of your unpaid loan balance in any year during this time. So, if market rates drop in the second year of owning a home, you may miss outon an opportunity to refinance to get lower monthly loan payments.
Mortgage definitions and Real Estate Terms, Consolidating loans, refinancing mortgages and reverse mortgage process available to anyone. This consumer information site contains several tools and guides to aid in purchasing or refinancing a home or commercial property.
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Tuesday, June 27, 2006
