Prepayment Penalties
Your efforts to save cash may actually cost you a lot more than you think. Call 12 for Action found that trying to pay off a loan too soon may cost you big.
Roger Behrstock considers himself a smart business man. Yet he was shocked when he went to refinance his adjustable rate mortgage to take out a little extra cash! A penalty of more than 87-hundred dollars! All because he paid off his loan within the first few years. Prepayment penalties used to be common only on high risk mortgages, but now experts say they're sneaking in everywhere.
In fact Call 12 for Action learned that prepayment penalties are now included in 60%^ of adjustable rate mortgages, not only that 60% of home equity lines of credit carry early terminations fees too.
The banking industry says these penalties are frequently used in lending to offset costs and of ten times borrowers are offered incentives to take the penalty. The problem is most people aren't even aware of the penalty in the first place.
Before you ask, find out whether there's a prepayment penalty, and if there is, how long it's for and what are you getting in return.
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