Profile picture for Hanover97

Are there currently any rules prohibiting mortgage prepayment penalties?

If not, are there certain mortgage structures or types of lenders that do not such penalties?
  • September 26 2013 - Savannah
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Answers (5)

Profile picture for Arizona Mortgage Pro
Prepayment rules vary from state-to-state and loan-to-loan, but the vast majority of loans and lenders (nearly all) do not have prepayment penalties. The Truth-in-Lending disclosure you receive at, or shortly after, your loan application will disclose whether or not the loan you have applied for has one.

When shopping for loans, just ask!

Best of luck.
  • September 26 2013
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There are still a few lenders who offer loans with prepayment penalties, but in exchange they offer below market rates on adjustable rate mortgages.  Also, those penalties seem to be a lot more "tame" than they used to be.

  • September 26 2013
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These days, unless you are using a "portfolio lender", you should not have any pre payment penalties.  Always be sure to ask and READ what you are signing as well.  PPP's are more a thing of the past at this point in time, however, they ARE still out there.  Please be cautious and again, read what you are signing. 

  • September 26 2013
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Profile picture for shapiroamg

Conventional loans, FHA , VA, and USDA will not have prepayment penalties. After that it will go state by state depending on the local law.

  • September 26 2013
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Profile picture for Outer Banks N C
Those restrictions would be in the terms of the loan. Most do not have a prepayment penalty, I have never seen a loan with one, but I guess it is possible to have such a thing in their terms.

tim
  • September 26 2013
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