Is there a penalty for selling your house too early in a mortgage?
I’ve been in my house for about a year now and may have a career change. I was told some lenders may impose a penalty for selling your house too soon. If so, what is the typical penalty? I still need to go over my mortgage papers to find this out. It’s also a thirty year loan, not sure if this matters.
Tags: career change, lenders, mortgage
August 15th, 2010 at 5:18 am
It’s possible. If there a pre-payment penalty, it will be included in your mortgage documents.
There are 2 types of pre-payment penalties (or PPPs) – hard and soft.
A hard PPP means that you pay the penalty for any early payoff – whether you sell or refinance (or win the lottery and pay off your mortgage for instance).
A soft PPP means that you do not pay the penalty for selling – just refinancing or early payoff.
Check your paperwork. A ppp will be attached as an addendum or called a "Pre-Payment Penaly Addendum" or "Waiver"
Brokers are notorious for sneaking these things onto loans because they make the loan more valuable on the secondary market, meaning THEY get paid more. It’s a nasty business.
There are also some states that have passed legislation capping these fees.
Good luck to you!
August 15th, 2010 at 5:18 am
if the loan agreement has something in early pay off, yes you will be penalized, you do need to read your agreement
August 15th, 2010 at 5:18 am
Selling the house doesn’t have a prepayment penalty, but paying off some mortgages does. The bank has nothing to do with you selling the house, only with them getting their money. Fixed rate loans seldom have prepayments. Some adjustable rate loans do, but mostly home equity lines of credit are the ones with prepayment penalty. Try looking at the truth in lending statement. I think it would be detailed there, under the boxes in the middle.
August 15th, 2010 at 5:18 am
The only answer to that is within your mortgage papers. None of us are going to know the specifics of your loan.
August 15th, 2010 at 5:18 am
In most cases there is no penalty in sales you home or paying the mortgage off early. But you need to read YOUR mortgage to be sure.