prepayment charge

Hi,

As per laws in Virginia, for a first mortgage loan a 2% prepayment charge of the amount of the prepayment can be imposed by the lender.

In addition it is required that the home should be occupied by the borrower for this law to be effective.

Colin

In Virginia, prepayment penalty is charged on for a loan secured by a mortgage or a deed of trust on a home which is already occupied or will be occupied. The penalty shall not exceed 2% of the amount repaid as the prepayment

Hi Guest,

No lender can collect prepayment penalty on loans which are secured by real property having 1 to 4 family residential dwelling units. But this law is applicable only when the prepayment results from the enforcement of the lender's right to call the loan due on account of the sale of the property against which the loan is taken.

Thanks,

Sara

can a prepayment penalty be over the life(30 years) of the loan?

Hey sharon,

The term of pre-payment penalty will be mentioned in the mortgage docs. I don't think it can be over the life of the loan.

In Illinois, can a loan secured by a first mortgage on residential real estate contain a prepayment penalty?

Hi Chuck,

As far as I know, the pre-payment penalty clause will be mentioned for the first mortgage secured on a residential real estate. You can check out the mortgage documents and get to know the clauses attached with the pre-payment penalty.

Thanks