Category: Pre-Payment Penalty


Some loans may have a pre-payment penalty in the event you pay off the loan early. You probably won’t see these on conventional or government residential loans, but you may see them on other residential loan products and on commercial loans; the penalty is a certain percentage of the loan amount. Example: You borrow $200,000 to do a fix and flip from a hard money lender. The hard money lender’s Note states he will collect a penalty of 3% of the loan amount if it is paid off in the first year. You fix up the property and flip it...

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