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Mortgage Prepayment Fees can STING!

How they swarm: You may need to sell your home sooner than expected, or you may have received an inheritance that you would like to use to pay off your mortgage. If your home mortgage has a prepayment penalty clause, you may owe the lender a fee equal to up to six months of interest just to get out of the loan.

How not to get stung: The best practice upfront is to avoid mortgages that carry these prepayment penalty clauses. If you need to sell your home and you have a prepayment penalty, you are probably out of luck.

If you inherited the money or want to use a tax refund, you may opt to make a large payment on the mortgage loan to avoid the penalty. Make sure to be specific and instruct the lender to apply the extra payment towards the principal only. Although all mortgages are unique, read your loan papers carefully, but you should be able to make an additional large payment of up to $20,000 per year with no incurred fees.

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The Trey Affolter Team always welcomes comments and is available to answer questions about Tacoma Real Estate and the surrounding cities within Pierce County Real Estate, South King County Real Estate, and North Thurston County Real Estate. 

253-222-6000

http://www.TreySellsHouses.com