Soft Prepay Penalty
Hi
We are purchasing an investment property that has a "2 year soft prepay penalty". How I understand it is we can sell within 2 years but can't refi without paying a penalty.
I asked the loan officer if it would specifically state this in the loan docs and she said she did not know.
Does anyone have any experience with prepay penalties?
Thanks
Mike
In the prepay penalties I have seen, they pretty much say the same thing...if you pay it off within 24 months, you will pay a penalty. Why the bank would care if you refi'ed or sold is beyond me...either way, your usually paying that bank off.
Let you in on a little secret....borkers get paid extra if they sell you a prepay penalty...they aren't a must.
What you are referring to is a hard prepay which I fully understand.
I'm looking for information on soft prepay penalties.
I can forgo the soft prepay but the rate will be higher.
Mike
I see said the blind man...learn something new everyday.
I found an article that may help a little.
http://realtytimes.com/rtcpages/20010412_prepay.htm
There are generally two types of soft prepayment penalty. One is you can sell but cannot refinance. This will be disclosed to you in depth at the closing.
The other is you can refinace with the same company if the loan hasn't been sold to someone else. If it has been sold and you refinance you would have to pay. On this example you would have to pay if you sold the property regardless.
Lori
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