There are several things to take into consideration when applying for a home mortgage, or when refinancing. In addition to looking at fees, getting all the information you need and considering the interest rate on your new home loan, it is also important to look at the fine print of prepayment penalties.

What are prepayment penalties on your home mortgage loan?

Prepayment penalties are, unfortunately, just what they sound like. If you pay off your home mortgage early, then the lender might issue you a fine. Prepayment penalties have been made illegal in some states, but not all, and there are some lenders that use prepayment penalties as a bargaining chip to lower the interest rate on the home loan. Don’t go for it. These prepayment penalties can be steep, up as much as two percent of the total loan amount (and sometimes more). That’s a lot of cash that you shouldn’t have to pay.

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financial goals, home mortgage, home mortgage loan, interest rate home loan