I wan to refinance my home, but my current lender will apply a penalty for refinancing before the contract id over. If the new finance company wants our business, will they try to take care of that penalty of waive it? Is there any way around this penalty?
2006-08-19 16:07:06 · 7 answers · asked by Maria 1 in Business & Finance ➔ Renting & Real Estate
There are precisely four ways to get out of paying a prepayment penalty
1) Don't accept one in the first place (too late)
2) Wait until it expires
3) Refinance with the same company. They will usually (not always) waive the penalty in such cases. Note that you're going to get stuck with another prepayment penalty, though!
4) Win a court case or settlement for their misdeeds that allows you to refinance without paying the penalty. This is usually a cure that's worse than the disease!
Now some companies will pay a prepayment penalty for you if you refinance with them, but their rates and terms will be outrageous. These people are not altruists, and they're making the money back somehow. You're better off waiting until the penalty expires or paying it yourself in most cases.
2006-08-20 01:26:15 · answer #1 · answered by Searchlight Crusade 5 · 0⤊ 0⤋
I am sorry to say that there is no way to get out of a pp (Pre-payment Pentality). Look at your Mortgage & Note that you got at closing. It will have it in there about the pp. The new lender can not do anything to get you out of the pp with your current lender. That is how lenders keep their clients for 2 - 3 years so they can get the interest on the mortgage. Your loan has been sold, or will be sold back on to the market. Lenders sell in bulk to get their money. How much is your PP? Call your company you are with, ask them what it would take to pay off your mortgage. That way you have a better idea of the new loan amount you would need. Add 3-4 percent to that amt for closing cost again. (just an estimate ok, will be lower) - Try and use the same title company and see if they will give you a break in the title fee's. Good luck to you.
Some thing else to consier:
Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score.
2006-08-22 01:25:04 · answer #2 · answered by W. E 5 · 0⤊ 0⤋
usually the pre -payment penalty is only 1 or 2 years. and no the new lender will not pay it. if the do, they will bury it in the new loan. no way around it. unless maybe if you refinance with the company you have now . they may wave it to keep your business
2006-08-19 23:15:54 · answer #3 · answered by xjoizey 7 · 0⤊ 0⤋
Sometimes you can refiniance through the same lender and they waive the prepayment penalty.
Once, when we sold our first home I wrote a letter to the mortgage company explaining that paying the fee would be a major financial burden. (It would have been too, we had just gotten married and I had gone back to college.)
And you know what? They waived the fee. Sometimes companies CAN have a heart.
Good luck.
2006-08-19 23:16:37 · answer #4 · answered by roomwithaview 3 · 0⤊ 0⤋
try to use the same lender so you don't have to pay prepayment penalty for refinancing, but they will not wave them. your prepayment penalty will start from beginning (if you have ppp for 2 years and you live in your home for 1 year, you still have ppp for another 1 year. if you refinance, you will have 2 years ppp only with different rate.)
2006-08-20 02:32:45 · answer #5 · answered by bianca 4 · 0⤊ 0⤋
I agree with the first answers....first, talk to your existing lender....also evaluate your current mortgage....some non conforming loans have up to 6 year ppmt penalties....makes them more valuable.....learn what you have and where you are...why do you want to refinance? if you need cash, you can get a second mtg without touching the first.....maybe......bottom line is you will pay for every cost/ppmt penalty for refi.....and no, there is no way around a ppmt penalty you agreed to......
2006-08-19 23:26:42 · answer #6 · answered by scott n 2 · 0⤊ 0⤋
HI Lulu,
your best bet is to call me so we can discuss further. Im a loan officer and because of the volume we put out to our lenders we can usually have some gret exceptions.........
Joe LaRaia
813-917-7965
Equistar Financial
727-789-1265
2006-08-19 23:36:38 · answer #7 · answered by joelaraia03 1 · 0⤊ 0⤋