Prepayment Penalty
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.
What it is
A prepayment penalty is a fee some loans charge if you pay off the balance early. It protects the lender's expected interest.
Most standard home loans today do not have one, but some non-QM and investor loans still do.
Why to check
Always ask whether a loan has a prepayment penalty before you sign. It can cost you if you sell or refinance soon.
We flag any penalty clause up front. Reach out and we will find you a loan with clean terms.
Verify the details for your own situation against these government and agency sources: CFPB guide to refinancing and CFPB Owning a Home guide.