When many lenders give you a loan, they want as much back from you as humanly possible. After all, the way they make money is through interest charges. If you keep your mortgage loan for 30 years, then lenders make a killing, making more than 100% profit in many cases (this means you basically pay the purchase price for your house twice — and it can even be three times in some cases!). So, it is in their interest to charge mortgage loan prepayment penalties in some cases.

Mortgage loan prepayment penalties are amounts of money (usually an expression of half a year’s or a full year’s interest) that you pay as a forfeit for paying off your mortgage loan early. It seems unfair, and it kind of is. But the idea is that the lender should make something off the fact that you borrowed money.

Happily, most conventional loans don’t have these anymore (but you should ask, and then double check before you sign). But subprime loans and other nonconventional loans do have prepayment penalties in large part.