Prepayment Penalty Clause

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The prepayment penalty shall be an amount equal to six months advance interest on the amount of the prepayment that, when added to all other partial prepayments during the twelve-month period immediately preceding the date of the full prepayment, exceeds 20% of the original principal amount of this Note.". The language will vary by state.

Prepayment Penalty:- A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty will be.

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Or if it fails to pay ahead. Don’t give up. And, by the way, unless you have a prepayment penalty clause in your terms and conditions, you have every legal right to pay down your mortgage, student.

Q. Is there a way to escape a prepayment penalty clause? A. No, the clause is there to protect the lender, or the ultimate investor if the loan was sold, which it probably was. investors pay extra for.

Or if it fails to pay ahead. Don’t give up. And, by the way, unless you have a prepayment penalty clause in your terms and conditions, you have every legal right to pay down your mortgage, student.

What is a Prepayment Clause? As we’ve said, a prepayment penalty fee is not something that is hidden from you until you decide to pay off your loan early. Lenders lay out whether or not they charge you a prepayment penalty when you sign on for your personal loan. It’s all explained in the prepayment clause of your loan agreement.

Prepayment Clause Law and Legal Definition Prepayment clause is a loan-document provision that permits a borrower to satisfy a debt before it is due date. It is a clause in a bond or mortgage that gives the borrower the privilege of paying the mortgage indebtedness before it becomes due. Usually, debt is satisfied without paying a penalty.

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If your lender has included any prepayment penalty clause in your loan, it will be there in your loan estimate and also in your closing documents. This is why you must read your loan documents properly to avoid any unforeseen events and surprise expenses. The clause about the penalty might be hidden in the section called the Addendum to the Note.