What is a prepayment penalty?
A prepayment penalty is a fee that some lenders charge if you pay off all or part of your mortgage early. If you have a prepayment penalty, you would have agreed to this when you closed on your home. Not all mortgages have a prepayment penalty.
Typically, a prepayment penalty only applies if you pay off the entire mortgage balance for example, because you sold your home or are refinancing your mortgage within a specific number of years (usually three or five years). In some cases, a prepayment penalty could apply if you pay off a large amount of your mortgage all at once. Prepayment penalties do not normally apply if you pay extra principal on your mortgage in small chunks at a timebut its always a good idea to double check with the lender.
If you have a problem with your mortgage, you can submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372).
If youre behind on your mortgage, or having a hard time making payments, you can use the CFPB's "Find a Counselor" tool to get a list of housing counseling agencies in your area that are approved by HUD. You can also call the HOPE Hotline, open 24 hours a day, seven days a week, at (888) 995-HOPE (4673).