California Prepayment Penalty Question
in the book Money Troubles Legal Strategies, it says: "A [prepayment] penalty is generally prohibited if more than half your gross monthly income is used to pay your monthly debts. Example (paraphrased) Gross monthly $1600... mortgage $650 plus car, student loan, credit cards = $25 total $1,075, well above half of his monthly income."
Anyone know the situation with this? I have a curent mortgage at 8% that has a $5000 PP Penalty and I am trying to refinance to consolidate debt and get closer to 6% on my new loan. But then again, my new lender wants to impose another $3500 PP penalty on my new loan. My current income situation falls into the above example and was wondering if I can get out of either penalty based on that?
Thanks![ Edited by TheRanchHand on Date 03/29/2004 ]
i dont know what your credit history is like, but keep shoping, you should be able to find somthing without a prepayment penalty.
on your previous contract try to renegotiate, it cant hurt to ask, offer to refi with the same out fit
John
Hi John,
Well, I am close to wanting to write off my current lender completely. I had an appraisal done on my place as my loan to value was getting me off the PMI, but not only would they not take it off because they said I had one late payment in 12 months, but they re-evaulated my escrow and my payments a month are now going UP $100!
I am seriously beginning to consider selling. Next month will be two years so I can do it tax free and avoid prepayment penalties and outrageous PMI payments.
But, if I hang on to it, I may just go with the refi and pay the prepayment even if I have to get on another one. Just wanted to see if anyone knows any of the legals in regard to prepayments and income or maybe PMI laws.
Thanks!