prepayment clause in real estate definition

10 de dezembro de 2020

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What Is a Prepayment Penalty? If you have a prepayment penalty, you would have agreed to this when you closed on your home. A prepayment clause allows the borrower to pay off part or all of the debt, without penalty or other fees, prior to maturity. Make sure a prepayment penalty clause doesn’t somehow manage to mysteriously creep into your mortgage before you sign the final loan documents. A prepayment penalty is a fee that some lenders charge if you pay off all or part of your mortgage early. From a mortgage lender’s perspective a prepayment penalty helps the lender at least recoup some or all of the significant expense it incurs in putting a new loan on the books. A prepayment penalty is a charge that the lender imposes on the borrower if the borrower pays all or part of the loan principal before its due date. Not all lenders impose a prepayment penalty. The CFPB rules prohibit prepayment penalties for most residential mortgage loans, except under a few specific circumstances. A prepayment penalty is a charge the borrower pays when a mortgage is repaid before a certain period of time elapses. A provision in a promissory note stating the amount a borrower may repay ahead of schedule without incurring a penalty. Prepayment Privilege The right of a borrower to repay a debt in full before it is due. Definition of "Prepayment of loan clause" Alicia Kurvin, Real Estate Agent Kurvin Residential Provision permitting a lender to charge the borrower a penalty for repaying a loan before its due date. Definition: a provision in a mortgage that allows the mortgagor to pay the mortgage debt ahead of time without penalty Pronunciation: \(ˌ)prē-ˈpā-mənt\ \ˈklȯz\ Used in a Sentence: Since we had a prepayment clause in our mortgage we were able to pay off our mortgage early without any penalty. In Florida, a borrower has the right to prepay his or her mortgage loan unless the mortgage instrument states otherwise. pre-payment clause 1. Prepayment clause Definition. It is a clause in a bond or mortgage that gives the borrower the privilege of paying the mortgage indebtedness before it becomes due. The prepayment privilege is favorable to the borrower because it relieves him/her of the debt, but it deprives the lender of interest that he/she would have received otherwise. Prepayment Clause Law and Legal Definition Prepayment clause is a loan-document provision that permits a borrower to satisfy a debt before it is due date. Yield Maintenance: A prepayment premium that allows investors to attain the same yield as if the borrower made all scheduled mortgage payments until maturity. Not all mortgages have a prepayment penalty. A provision in a loan agreement that stipulates the amount of principal a borrower can prepay ahead of schedule without penalty as well as the prepayment penalty for larger prepayments. A prepayment clause is normally included in FHA and VA mortgages on real property. 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