Prepayment Penalty

**oneofthecrowd** · 01-03-2009, 11:08 AM

I spoke to my lender about my 30 year fixed mortage loan (I'm preaproved) to make sure there are no prepayment penalties. He says there aren't but he is a broker for my credit union and says he will sell my loan to another bank later. How can I make sure there are no prepayment penalty instead of taking the lender's word for it? (I hope an extra one or two hundred dollars will go to the principle and not interest). Will I need a real estate lawyer for this or can I just let my real estate agent handle everything? Thanks a bunch!

**suziclue** · 01-03-2009, 11:27 AM

When you are ready to sign your loan document look at the terms. It should list "No prepayment penalty" on the document. Also look at the APR number to see if it matches what you are agreeing to. At todays current low rate make sure you're signing for a FIXED rate.

It's very typical for mortgage lenders to send your loan to a larger bank in the loan aftermarket. Everything you sign on your documents will pass on to the next group that owns your loan. So don't let this worry you too much. My loan was sold once to wachovia and later to Chase but everything remained the same. I just had to write a check somewhere else.

Good luck and READ those loan docs. You can get a lawyer or a friend to help you read it if you'd like. It's always good to have a second eye.

Suzi

**oneofthecrowd** · 01-03-2009, 12:20 PM

Thanks for the advice.

A few more things to ask if I may... About how much paperwork am I looking at signing? and, will I have a few days to sign (I'm a slow reader) or will they want it done immediately? (its a bank owned foreclosure home by the way)

**suziclue** · 01-03-2009, 02:05 PM

You can ask them to send you the loan docs a few days ahead of time and then meet with them for the actual signing. I did this with mine so when it came to signing, i could just flip through the pages and sign. Remember you are the customer so don't let them bully you around. Rates are at historic lows right now so make sure you're getting the best rates.

(it's about 25 - 50 pages depending on what you sign up for)

I hope you got quotes from more than one lender.

Good luck the first time is always a little nerve wrecking.

**oneofthecrowd** · 01-04-2009, 09:04 PM

Speaking of quotes from other lenders... I did get two others and one online. This one on the net I emailed information to but never got any feedback. This so-called direct lender FHA mortgage co. promised to email me within 24 hours but never did. How do I know if they are being truthful to me and what could happen to my personal information? Could it be an old company that is no longer in business but still have a web site and receive email? Thanks again

**suziclue** · 01-07-2009, 04:21 PM

You have to be careful with posting info on websites. I would stick with big companies like lendingtree.com and ditech.com, eloan.com...etc

I personally went to a local lender and had them provide me quotes.

**Greg** · 01-08-2009, 04:44 AM

Online and out of town lenders usually make a deal a horrible experience. Once they have you and your money locked into the deal they have no motivation to perform in a timely manner.

A local lender has to worry about their reputation in the real estate community so they have motivation to perform in a timely manner.

Interest rates are not any better from some anonymous internet company than they are from the mortgage brokers in the community you are buying in.

Use a local lender and the deal will be a lot smoother.

**oneofthecrowd** · 01-09-2009, 07:25 PM

I have chosen the local lender, our credit union, which finances all their FHA loans through a mortgage broker who represents them so, I think I'm in good hands even though he's charging us one and a half points on the loan.

I'm going to check our credit reports also to make sure none of those other lenders did any funny stuff with our information.

Thanks alot to all of you! Your information is a great help and relief as well.