Back to Glossary
Prepayment Penalty
January 19, 2023
Some lenders levy a prepayment penalty if you pay off all or a portion of your mortgage early. If you have a prepayment penalty, you agreed to it when you closed on your house. Prepayment penalties do not apply to all mortgages. Typically, a prepayment penalty only occurs if you pay off the whole mortgage sum within a certain number of years because you sold your property or refinanced your mortgage (usually three or five years). If you pay off a considerable portion of your mortgage at once, you may be subject to a prepayment penalty in some instances. Prepayment penalties are usually waived if you pay additional principal on your mortgage in tiny increments–but it's always a good idea to double-check with your lender.
Related Topics
10 Best Home Builders in Nashville, TN: Find Your Dream Home Today
Wesley Mortgage 2023 Year-In-Review
What Is a Property Tax Lien
What Is an Adjustable Rate Mortgage (ARM)?
Navigating the Process of Mortgage Modification
What Is Non-Recourse Lending?
What Is a Short Sale?
When Is the First Mortgage Payment Due?