AboutBrian HAHN Expertise I am a mortgage banker/loan officer.Have top knowledge of all types of mortgage loans.Can assist nearly anyone looking to finance a residential property.I enjoy traveling [Society Islands (Tahiti, Bora Bora), Hawaii (Maui) and Africa (Zimbabwe)].I keep detailed information on adventures and am willing to share this information with others.{{Bachelor of Science in Business Administration from the University of Iowa, 1986"
Question What does this mean?— — If within 2 TWO years from the date of execution of the Security Instrument I make a full prepayment or, in certain cases a partial prepayment, I will at the same time pay to the Note Holder a prepayment charge. The prepayment charge will be equal to six (6) months advance interest on the amount of any prepayment that, when added to all other amounts prepaid during the twelve (12) month period immediately preceding the date of the prepayment, exceeds twenty percent (20%) of the original principal amount of this Note. In no event will such a charge be made if it violates state or federal law. ' 6. LOAN CHARGES
If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so that the interest or other loan charges collected or to be collected in connection with this loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from me which exceeded permitted limits will be refunded to me. The Note Holder may choose to make this refund by reducing the Principal I owe under this Note or by making a direct payment to me. If a refund reduces Principal, the reduction will be treated as a partial Prepayment.
Answer Marilyn,
This means the mortgage loan has a two year prepayment penalty.
If you pay more than 20% of the original amount borrowed towards your principal within a 12-month period of time, you are charged the pepayment penalty.
Also, if you pay the loan in full within the first 24 payments, you will pay the prepayment penalty.
The prepayment penalty is equal to six months of interest that you would have paid on your mortgage loan had you not paid the loan off early.
I hope that clarifies the prepayment for you.
Wishing you the very best,
Brian Hahn
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