Started a refi stupidly based off a rep at my servicer saying he was ‘100% certain’ there is NOT a prepayment penalty over a recorded phone call.
Got a payoff quote for 20k prepayment.
What’s the best way to get around this?
Maybe claim financial distress even if that’s not the case?
Should I have my escrow/title work it out with them?
Did you use a Down Payment Assistance program when you purchased your home? Other than having to pay back the assistance, most loans do not have PPP anymore.
Don’t do a loan with a prepay penalty and you don’t have to worry about it. What kind of loan are you in that you have a PrePay penalty???
Marley said:
Don’t do a loan with a prepay penalty and you don’t have to worry about it. What kind of loan are you in that you have a PrePay penalty???
From my understanding, it’s law that you can’t have a prepayment penalty on a mortgage. My company has no prepayment fees, so I’ve never really had to consider it.
Edit: nvm, I see his is a non-QM.
So you’re in the process of refinancing? And the Loan Officer said there was no prepayment penalty. He’s talking about the new loan surely.
So during the process, you got a payoff (for the current mortgage being paid off in the refinance?) and it includes a prepayment penalty? Is that accurate?
Find your Closing Disclosure from your original mortgage and look at the first page. It clearly states whether a prepayment penalty exists.
Was the loan you are refinancing a DSCR or non-QM loan?
Keir said:
Was the loan you are refinancing a DSCR or non-QM loan?
It’s likely he doesn’t know what those are. I know what a non-QM is, but what is a DSCR?
Keir said:
Was the loan you are refinancing a DSCR or non-QM loan?
It’s likely he doesn’t know what those are. I know what a non-QM is, but what is a DSCR?
Debt service coverage ratio… used for investment properties. They often have up to 3-year prepayment penalties to lower the rate.
Keir said:
Was the loan you are refinancing a DSCR or non-QM loan?
It’s a non-QM DSCR.
Keir said:
Was the loan you are refinancing a DSCR or non-QM loan?
It’s a non-QM DSCR.
Not going to avoid the prepayment unless you might be doing another loan with the same lender.
@Keir
Problem is they’re not a lender, just a servicer. Is there a way to negotiate that out?
What if I claim I’m in ‘financial distress’?
There’s no getting out of the PPP, other than time. The prepayment period will expire at some point.
Wow! Haven’t seen a prepayment penalty on a mortgage in a really long time. Who’s the lender?
Is your loan less than 6 months old?
Did you check your original paperwork to see if you signed a prepayment penalty rider?
My suspicious mind is thinking that there may not be a specified prepayment penalty and your loan is less than 6 months old, so the original lender is trying to claw back some fees they give up if a loan isn’t kept on their books for a certain amount of time.
OR, as others have mentioned, you may have some kind of non-conventional loan. Even so, there should be a rider with your original paperwork indicating a prepayment penalty.
I’m so curious!