According to the financial blog site FinWeb, most homeowners don’t pay attention to prepayment penalties until it’s too late, usually when they decide to refinance. If you’d like to avoid paying a prepayment penalty it’s important to understand how they work and more importantly, how to get out of paying if your existing mortgage has one.
A prepayment penalty is a fee the lender charges to penalize the borrower if he pays the loan off before the time set out in the terms and conditions. Every day consumers sign on the dotted line of mortgages and loans not fully understanding the terms and conditions of the financing. It isn’t until they try to refinance or pay off the loan that they are made aware of the true conditions.
Doing your homework before shopping for the best refinance rates will help you avoid junk fees like the prepayment penalty and save you thousands of dollars in fees and markup. Investing one hour of your time can literally cut as much as $1200 a year from your payments.
You can learn more about minimizing your mortgage refinancing expenses like the loan origination fee while avoiding unnecessary markup of your interest rate by checking out my free Underground Mortgage Refinancing Videos.