Mortgage Glossary
Prepayment Penalty
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A prepayment penalty is a fee some loans charge if you pay off or refinance the mortgage early, within a set period.
What Prepayment Penalty means
Most owner-occupied Qualified Mortgages can't include them, but some non-QM and investment loans do. Always check whether one applies before signing.
Florida example
A Florida DSCR investor's loan may carry a three-year prepayment penalty, so refinancing in year two triggers a fee. Knowing the penalty schedule shapes when it makes sense to refinance or sell.
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