Home Loans
How Do I Figure Out My Mortgage Prepayment Penalty?
(presented by www.refinance-refinance.net - mortgage lenders)
By Ben Afzal
Basics
Mortgage prepayment penalties usually come in two types: hard prepayment and soft prepayment penalties.
A hard prepayment penalty is when a prepayment penalty is charged if a borrower refinances or sells a property within the prepayment period.
A soft prepayment penalty is when a prepayment penalty is charged if a borrower refinances but not if they sell a property within the prepayment period.
Most prepayment penalties are hard prepayment penalties.
Your loan documents will state how long your prepayment penalty is in effect.
You can call and check wtih your lender what your prepayment penalty is.
Payoff Statement
A payoff statement is an official document from a lender stating how much money is needed to pay off your current loan as of a specific day. The payoff will include your current loan balance, a prepayment penalty if there is one, and any outstanding interest and paperwork fees.
You may need to pay for this payoff statement.
Keep in mind that the payoff statement has an expiration date on it because the amount is always changing as you make payments or terms of the loan change.
Figuring Out Your Prepayment Penalty
Your prepayment penalty is often several months of interest. Six months interest is often what a prepayment penalty is. It can be a percentage of the loan’s value. Check your loan documents.
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