Prepayment Penality
I live in FL and as all of you know we have been hit hard by the storm, so much that I am gong to have to sell my house.
The ? is I have a prepayment Penality of 6% (which is 9,750.) if I paid the loan off within 2 years. No of course my plans were not to sell but I am forced to due to loss of work. Can anyone help me with inforomation on how I could get out of my prepayment penality given the situation. Your commets are always appreciated. :-(
I also live in Fla. I have seen similar prepayment penlaties which usually apply to the first 5 years (like 20% over 5 years, etc). However, most of these also have a clause for selling or only apply to refinancing, so if you sell, it does not apply. CAVIAT, the contract you signed is probably the key to answer. What does it say about selling or refinancing? Hope this helped.
I read the contract over and over. The rider (on a good note) doesnt say anything about if you sell. I live in Volusia County and we have been hit by all 3, it stinks. Thank you for your response
Depends on the lender whether the penalty is triggered when you sell. A "hard" prepay is triggered no matter how the loan is payed off and a "soft" prepay is only triggered if your refi. Call your lender or request a payoff and see.
I have a hard prepay. But I am going to working on it still. After I make my next payment I will have some barginng room. Thank u.
In certain situations you may get the bank to due the next loan for you with the same terms or better depending on your situation as far as payment history. Most banks will allow you to sell and use them without paying the prepayment penalty. I would check into that if I were you. Of course if you didn't pay them on time you have nothing to stand on for leverage.
Lori
[addsig]
1.Allow the buyer to purchase "subject to" (if you don't have issue with due on sale (DOS) clause), with a balloon schedule for after the prepayment penalty expires.
2. Similar scenario, depending on equity available, you may want to do a "wraparound".
A good attorney can assist you with either of these.
3. I have seen MLS listings where the seller states buyer will have to pay sellers prepayment penalty. I wonder how successful that is, though. It may be better just to mark price up to cover you penalty fee. Ask your realtor.
4. Lease purchase the property. You will still keep you mortgage, but someone else will be making payments until they exercise option in 1-2 years.
5. Just do a straight lease and keep it as a rental property.
Good Luck!
Ask for a significant down payment and carry the note youself. Most are willing to pay a higher purchase price and payment per month. You remain on the original loan. You just pass through the payments from your new buyer.