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Prepayment Penalties in Real Estate Loans
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Prepayment Penalties in Real Estate Loans

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Questions and Answers

What is the prepayment penalty for a 30-year fixed mortgage if paid off within the first 5 years?

  • 5% penalty of the remaining loan balance (correct)
  • 1% penalty of the remaining loan balance
  • 3% penalty of the remaining loan balance
  • 7% penalty of the remaining loan balance

    • Which type of mortgage has the 5-year stepdown prepayment penalty?

  • 7/6 ARM only
  • Both 30-year fixed and ARM mortgages (correct)
  • 5/6 ARM only
  • 30-year fixed only

    • What is the prepayment penalty for investment properties if the amount prepaid exceeds 20% of the original principal balance?

  • 1 month interest on the amount prepaid
  • 6 months interest on the amount prepaid (correct)
  • No prepayment penalty required
  • 3 months interest on the amount prepaid

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