Posted on: 28th Sep, 2009 12:46 am
What is the max prepayment penalty on a mortgage
The maximum pre-payment penalty would depend upon the clause as mentioned in your mortgage doc. The mortgage documents would specify as to what type of pre-payment penalty the lender may charge you.
no such thing as "maximum"...a lender and a borrower can negotiate whatever terms they wish when agreeing on a mortgage loan.
I think prepayment penalty differs as per region(location)
each state has its own maximums for prepayment penalties. those state laws probably just cover lenders who are regulated/chartered by the state.
the states ask federally chartered lenders to abide by their regulations, but, a state has no authority over any federal institution.
the federal government just established some prepayment penalty regulations:
1. can not have any prepayment penalty that lasts longer than two years
2. if refinance with the same lender, no penalty
3. the payment of principal and interest can not change over the first four years of the loan.
these are new regulations and not clear yet what it controls--maybe only primary residences--owner occupied properties, and maybe only hich cost loans.
the states ask federally chartered lenders to abide by their regulations, but, a state has no authority over any federal institution.
the federal government just established some prepayment penalty regulations:
1. can not have any prepayment penalty that lasts longer than two years
2. if refinance with the same lender, no penalty
3. the payment of principal and interest can not change over the first four years of the loan.
these are new regulations and not clear yet what it controls--maybe only primary residences--owner occupied properties, and maybe only hich cost loans.
