0
Add your answer:
Earn +20 pts
How can you get out of a home loan prepayment penalty?
If this prepayment penalty is written into the contract, no way can you get out of it. Usually, though, the prepayment penalties last about 3 years. At the end of the 3 years, the prepayment penalty will be gone. Also, some companies will forgive the prepayment penalty, if you get your new mortgage through them if you are selling your current house and buying another house. Prepayment penalties are usually for paying off the loan, or paying big amounts back on the loan. Your contact will specify what the prepayment is for.
If a loan has a prepayment penalty should you still pay it off?
It depends upon whether or not you want to pay the prepayment penalty. You would need to consider the amount of interest that would be charged versus the amount of penalty incurred for paying the loan off early, before making a decision.
Can you take out a home equity loan if you have a prepayment penalty if you sell your home before two years after you purchase it?
Yes, as long as there is equity to use. The lender that will do the home equity loan will have figured the prepayment penalty into the 1st mortgage balance just in case you do sell your home before 2 yrs. are up. The lender will ask for specific paperwork including your mortgage (promissory note) so they will know about the prepayment penalty.
Can you refinance an auto loan before a year?
yes - you can refinance an auto loan at any time. You will want to make sure you current bank does not charge a prepayment penalty though.
Is there a way to lower mortgage payment?
One of the best ways to reduce mortgage payments is to do a mortgage refinance as long as the new mortgage interest rate is at least two to three percent lower than the current rate and there is sufficient equity in the house. It's also important to a make sure there is no prepayment penalty on the existing loan. A prepayment penalty is a fee charged by the lender if a mortgage loan is refinanced before the prepayment expires
What does a prepayment penalty that is Not Applicable mean?
If you have prepayment penalty clause in your agreement with lender, then if you pay off the entire loan amount with in the maturity period of your loan. You have to pay some amount of money as penalty. If prepayment penalty is not applicable means, even though if you pay off the the loan amount with in the maturity period. You need not pay any penalty.
How can you get out of a home loan prepayment penalty?
If this prepayment penalty is written into the contract, no way can you get out of it. Usually, though, the prepayment penalties last about 3 years. At the end of the 3 years, the prepayment penalty will be gone. Also, some companies will forgive the prepayment penalty, if you get your new mortgage through them if you are selling your current house and buying another house. Prepayment penalties are usually for paying off the loan, or paying big amounts back on the loan. Your contact will specify what the prepayment is for.
What is the purpose for prepayment penalty?
The purpose of a prepayment penalty is to provide lenders with compensation for the potential income they would have earned if a loan was paid off early. It is intended to discourage borrowers from paying off their loan before the agreed-upon term and to ensure that lenders are able to collect the full amount of interest they were expecting.
If a loan has a prepayment penalty attached to it could it still be viable to retire it and why?
Perhaps. The difference in the prepayment penalty and the amount of interest paid until the loan is satisfied is a major consideration. If the difference is small,early payoff might not be the best option.
If a loan has a prepayment penalty should you still pay it off?
It depends upon whether or not you want to pay the prepayment penalty. You would need to consider the amount of interest that would be charged versus the amount of penalty incurred for paying the loan off early, before making a decision.
Prepayment penalty on a fixed rate Was there a new law passed abour prepayment penalty?
That is going to be a State by State thing. But you will not find a Prepay penalty on an FHA or VA loan and typically you will not find them on Conforming loans (Fannie/Freddie stuff)
Can you take out a home equity loan if you have a prepayment penalty if you sell your home before two years after you purchase it?
Yes, as long as there is equity to use. The lender that will do the home equity loan will have figured the prepayment penalty into the 1st mortgage balance just in case you do sell your home before 2 yrs. are up. The lender will ask for specific paperwork including your mortgage (promissory note) so they will know about the prepayment penalty.
Can you refinance an auto loan before a year?
yes - you can refinance an auto loan at any time. You will want to make sure you current bank does not charge a prepayment penalty though.
Is there a way to lower mortgage payment?
One of the best ways to reduce mortgage payments is to do a mortgage refinance as long as the new mortgage interest rate is at least two to three percent lower than the current rate and there is sufficient equity in the house. It's also important to a make sure there is no prepayment penalty on the existing loan. A prepayment penalty is a fee charged by the lender if a mortgage loan is refinanced before the prepayment expires
Is a prepayment penalty on a home loan tax deductible?
No the penalty is not deductible on a home loan. Only the interest that is paid. The penalty is considered as a late payment not interest. good luck.The initial answer to this question is incorrect. Prepayment penalties are sometimes deductible if the payment is made out of pocket as opposed to being rolled over into the new loan. It is not ever considered to be a late payment. It is considred interest. Even if the amount is rolled over into a new loan, you may be able to pro rate the deduction over the term of the loan. The bottom line is that depending on your particular circumstances, the prepayment penalty might be deductible.PLEASE consult a tax consultant for the most up to date 2008 tax information. and also PLEASE remember that on the internet, never ever take the advice of one so-called expert. check. check and double check everything.Here is the info directly from the IRS.http://www.irs.gov/publications/p936/ar02.html#d0e770Mortgage prepayment penalty. If you pay off your home mortgage early, you may have to pay a penalty. You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan.
Are residential mortgage pre-payment penalties tax deductible?
I am not 100% certain of the answer, but in most cases we can deduct the interest, but not usually any fees associated with the mortgage. I am assuming you can't deduct it. Consult a tax professional. I have a suggestion for those who are thinking of paying off their mortgage when a prepayment penalty is in place. I used to be in the mortgage business. Suggestion: Prepayment penalties are usually around 5%. So, if you have a balance of $10,000 the prepayment penalty would be $500. There is a very simple answer for avoiding most of the cost of prepayment. In your next payment pay everything but a portion. Leave a balance of $100 or $500. In most cases the prepayment penalty is calculated on the balance. Make your your final payment of $100-$500. This way your penalty will only be a $5-$25 saving you a lot of money. Then the tax issue is really of no consequence.From IRS Publication 936: "Mortgage prepayment penalty.If you pay off your home mortgage early, you may have to pay a penalty. You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan." I paid a prepayment penalty and my year end interest paid for the loan included the penalty.Hope that helps. Navywings 17:21, 26 May 2008 (UTC)
If a loan has a prepayment penalty attached to it would it still be viable to retire it?
You need to compare the cost of the repayment penalty and the benefits of having the loan (such as deductible interest) vs. the benefits of paying off theloan such as increase cash flow. Do that analysis and determine the best use of your money.
