You might want to refer back to the Note associated with your loan. If there is a pre-payment penaly is should included in the Note (or there should be a 1 page rider regarding that)
Thanks for your question.
If your loan has a Pre Payment Penalty, be sure that you
as a Consumer, check the loan Documents and are not agreeing to one
in today's market.
I have had clients who had to pay $20K in pre pay penalties to regular banks
such as Countrywide, etc., who have gone under or have merged, such as those
that were leverage to stocks.
Since, the 2007 housing crisis, 99% loan of the loans do not
have Pre Payment penalties, unless you get a loan from a Hard money lender.
Quite a few loans prior to 2007 had pre pay penalties.
Other things may come into play. After Bank of America took over Countrywide they were eager to refinance many of the loans.
Top 2 agent nationwide at Keller Williams Realty
Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo counties
The terms of the prepayment penalty, if there is one, will be found in the deed of trust.
That is one of the reasons why it is very important for you, your REALTOR and your loan officer to read the deed of trust very carefully so that you understand all of the terms in the deed of trust for your mortgage.
The Deed of Trust is a rather lengthy document and can be time consuming to read and understand.
A good REALTOR will request a copy of the Deed of Trust early and review it with you to make certain that it contains all of the terms that you agreed to, and does not contain any terms that you did not agree to.
That is one of the reasons that I ask for a copy of the Deed of Trust Early so that I can review the document with my client to make certain that all of the terms are correct and accurate, and that we understand all of the terms in the Deed Of Trust.
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org
So are HARD and some are SOFT
A SOFT prepayment penalty allows a borrower to sell their home at anytime without penalty, but if they choose to refinance the mortgage, they must pay that prepayment penalty.
A HARD prepayment penalty, on the other hand, sticks the borrower with a penalty if they sell their home OR refinance their mortgage. Obviously this is the tougher of the two, and basically gives a borrower no option of jumping ship if they need to sell their home quickly.
If you are not sure, call the loan agent who helped you.