Envision Funding

We Close Loans Fast!

  • Home
  • About
    • About Us
    • Privacy Policy
  • Blog
  • Resources
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage FAQ
    • Mortgage Glossary
    • Debt Solutions
  • Applications
    • Business Funding Full Application
    • Broker Registration
    • Real Estate Lending Quick Application
  • Loan Programs
    • Business Loans
    • Commercial Loans
  • Contact

Understanding The Role Of A Mortgage Prepayment Penalty Fee

January 21, 2021 by Regine Daley

Understanding The Role Of A Mortgage Prepayment Penalty FeeWhen people take out a home loan, it is important to think carefully about how the home loan works. At first, the majority of the monthly payment is going to go towards interest. For example, it is not unusual for 90 percent of the monthly mortgage payments go toward interest during the first year. Then, during the latter part of the loan, most of the payment is going to go towards paying off the principal.

Therefore, it should come as no surprise that a lot of homeowners are looking for ways to reduce the amount of Interest they pay on a home loan. 

For example, some homeowners consider putting a larger down payment on the home in order to reduce the amount of money they have to pay in the form of interest. Another possibility involves paying off the mortgage early; however, a mortgage prepayment fee may apply. 

What Is A Mortgage Prepayment Fee?

A mortgage prepayment fee is exactly what it sounds like. This is a fee that some homeowners have to pay if they end up paying off their mortgage early. For lenders, they know that a lot of the money they are going to make comes in the form of interest. Therefore, they also understand that if their home loan gets paid off early, they are going to lose a significant amount of money. Therefore, as a way to disincentivize homeowners from paying off their home loan early and posting them interest, they apply a mortgage prepayment fee. 

When Will A Mortgage Prepayment Fee Apply?

Of course, it is also important for homeowners to take a look at the contract carefully and see when a mortgage prepayment fee applies. For example, if homeowners are paying one extra monthly payment per year, then it is highly unlikely that a mortgage prepayment fee is going to apply when the home loan gets paid off early. On the other hand, if a homeowner is looking to pay off an entire home loan in 3 years, then there is a high chance that a prepayment fee is going to apply. In order to avoid this mortgage prepayment fee, every homeowner has to take a look at their contract carefully.

 

Filed Under: Mortgage Tagged With: Mortgage Fees, Mortgage Prepayments, Mortgage Tips

Regine

Contact Regine


President
Envision Funding
Private Money Lender
CALL (470) 377-6716


GET A RATE QUOTE  

Connect with Us!

Let’s Keep In Touch!

  • This field is for validation purposes and should be left unchanged.

Browse Articles by Category

The Latest Articles

  • What’s Ahead For Mortgage Rates This Week – March 27, 2023
  • 3 Things That Will Absolutely Kill Your Chances for a Mortgage Approval
  • Mortgage Interest Rate Versus APR: What To Know
  • Navigating A Market With Higher Interest Rate
nmlsconsumeraccess.org
Equal Housing Lender
Envision Funding Solutions, Real Estate Loans, Kennesaw, GA

Our Location


Envision Funding
3105 Creekside Village Dr. ste 802
Kennesaw, Ga 30144

Copyright © 2023 · Powered by MySMARTblog