Real Estate Questions???

Question

Hi, i was wondering about selling our home, We have lived here for 1 1/2 yrs and decided we want something diffrent. We purchased our home for 85,000 and are suppose to refinance at our 2 yr dec 17th there is a prepayment penilty of 10% of purchase price.. I was wondering how much that is and if we can sell before our refinance date.. Please let me know thanks

Chasity

Answer 1

I'm afraid you where misinformed on the prepayment penalty. The amount you will have to pay is 80% of six months interest, not 10% of the total loan amount or purchase price. This is a federal law and is implemented in all states.

Check on your "Note" and see if you can see whether or not it is a HARD or SOFT prepayment penalty. If soft, you are ok to sell the home without having to pay the penalty.

Answer 2

If you pay your loan off before the 2 year prepayment period ends, whether you sell the home or refinance it, you are subject to the prepayment penalty. I imagine if you financed 100% of the purchase price it would be possible for the prepayment penalty to be based upon the sales price. It is usually a percentage of the original loan amount. 10% seems awfully high to me. I would redccomend you take the package with your original loan documents to a mortgage banker so that he/she may review them and explain your options.

Answer 3

Hi Chasity. Great question. Your best bet would be to call your mortgage company and ask them. Reading through all the legal craziness in a mortgage note is going to do nothing but give you a headache. Plus, if you don't know where to look for it, it is going to be hard to find it.

As far as selling your current home or refinancing, if you would like any assistance, feel free to contact me at timothy.kazee@americanhm .com and I would be more than happy to help you in any way I can. Great question.