PrePayment Penalty Information
Can anyone read this and let me know in simple language what this means?
A PPP charge on the aggregate prepayments made within any consecutive 12 month period which exceed 20% of the original principal amount state in the Note (the “Excess Principal). The prepayment charge will not be in excess of 1% outstanding principal balance prior to the prepayment.
Darn, Finni beat me to it!
Chris
I help borrowers sign loans for a living, I often see a variation of this PPP. Make sure you go back and read your prepayment section of your note completely. The other posters are exactly correct. I often see terms which state any payment over 20% in a consecutive 12 month period will be penalized a 1% PPP above the stated 20%. so:
100K loan
you make a prepayment of 21000. you would be penalized only on the 1000 which is above the 20% equalling a $100 Penalty. read your mortgage note and let us know what you find.
So far I have only made one payment and I do not have any details of the prepayment penalty other than I found the above as Michigan law were the property is located. The paperwork I have states it may have one. I will call the lender and ask for more information on this.
Quote:
On 2006-04-11 02:31, Ababish wrote:
I help borrowers sign loans for a living, I often see a variation of this PPP. Make sure you go back and read your prepayment section of your note completely. The other posters are exactly correct. I often see terms which state any payment over 20% in a consecutive 12 month period will be penalized a 1% PPP above the stated 20%. so:
100K loan
you make a prepayment of 21000. you would be penalized only on the 1000 which is above the 20% equalling a $100 Penalty. read your mortgage note and let us know what you find. <IMG SRC="images/forum/smilies/icon_smile.gif">
Thank you all for the advice. It was well recieved and needed.
Thanks again