Re: pre-payment penalty

Posted by Roe on August 05, 2006 at 02:08:31:

In Reply to: pre-payment penalty posted by debbie on August 01, 2006 at 07:20:24:

Check the promissory note for riders and/or addendums. If this is an interest only note (X years interest only then a periodic rate change for the remaining term), there should be a rider/addendum attachment outlining the prepayment penalty definitions and terms for application of principal. It may state if the principal is paid in full (by bonifide sale/purchase) there isn't any pre-payment penalty to worry about...It should be stated as one of the allowable exceptions! Make sure you have the entire package of paperwork that was executed. Sometimes the riders and addendums are recorded separately from the rest of the note docs.

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Comments:
: Check the promissory note for riders and/or addendums.  If this is an interest only note (X years interest only then a periodic rate change for the remaining term), there should be a rider/addendum attachment outlining the prepayment penalty definitions and terms for application of principal.  It may state if the principal is paid in full (by bonifide sale/purchase) there isn't any pre-payment penalty to worry about...It should be stated as one of the allowable exceptions!  Make sure you have the entire package of paperwork that was executed.  Sometimes the riders and addendums are recorded separately from the rest of the note docs. 


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