Did you know you could be penalized for paying off your loan earlier?

What is a Prepayment penalty

• a fee that lenders can charge when you pay your loan off early.

• agreement between a borrower and a bank or mortgage lender that regulates what the borrower is allowed to pay off and when.

Not all mortgages have a prepayment penalty.

The Two- Types of Prepayment Penalties

• Soft Prepayment 

• Hard Prepayment

Why Do Lenders Charge Prepayment Penalties

• Lenders charge prepayment penalties to protect their investment when lending you money.

• Lenders make money from the interest they charge on loans. When you prepay a loan, the lender doesn't earn as much interest.

Types of Loans with Prepayment Penalties

• Mortgages

• Car Loans

How to see if Your Loan has a Prepayment Penalty

• read your contract 

• have a professional review it