Straight Talk About Real Estate

When obtaining a loan, make sure you ask the lender if you would have to pay a prepayment penalty if you decide to pay off the loan early. Some loans can have anywhere from one year to three years prepayment penalty period where if you pay off the loan within that time, you pay a penalty. The penalty is usually six months of interest, which is quite a hefty amount.

If you do have a prepayment penalty clause in your loan, make sure that you do not plan to sell the house, refinance, or make extra payments to pay off the mortgage more quickly within that prepayment penalty period.