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Prepayment penalties

Hi. We are working on a REFI, but there is a questionable line in the docs we're to sign that says:

• there are no prepayment penalties
• (but) prepayment does not entitle us to reimbursement of our financing fees. ('fees' presumably meaning the interest)

These fees are estimated at 75k over the life of the 15 yr fixed mortgage.

Is this a misunderstanding?

Is this normal?

Everything else is on the up&up and we have a great rate, but if we won the lottery 2 wks after the mortgage was in effect, I sure wouldn't want to owe the the 15 yrs worth of interest.

Can you clarify this for me?

Thanks.
  • August 02 2012 - Plainfield
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Answers (5)

Profile picture for GRFXfreak
Thanks Everyone.

Appreciate it.
  • August 03 2012
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While Caroline's advice is always good advice (check the details), let me call your attention to the wording.  It says you are not entitled to "reimbursement" of your financing fees.  You can only be reimbursed for something you have actually paid.  If you have not paid any advance interest, you cannot possibly be "reimbursed" for it.  Ask the settlement attorney or title company that you will be using.  They should be able to clarify. 
  • August 03 2012
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Justin provided helpful information but if you are not borrowing from his lender I recommend that you confer with your own lender.  Since I deal with contracts all the time I often find small discrepancies from one lender to the other and although the wording seems "standard" your lender would know for sure.
  • August 02 2012
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Profile picture for GRFXfreak
Thanks for the clarification. Appreciate it.
  • August 02 2012
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This is standard on all loans. It means if you payoff early you won't get a refund of closing costs you paid/financed or interest you already paid. You won't be held accountable for future interest.
  • August 02 2012
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