Definition of prepayment penalty: Additional fee imposed by some loan agreements where a borrower retires a loan before its scheduled pay-off date. It is meant to compensate the lender for not realizing the anticipated interest income.
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A prepayment penalty is a fee that lenders charge to borrowers who pay off loans "early." Loans like auto loans and home loans are typically scheduled to last for a certain number of years ( known as the term ), with the loan balance reaching zero at the end of the term.
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It was a good quarter for our loan fees, including prepayment penalties. It was a good quarter for gains. Nonperforming assets, by our definition, is foreclosed and repossessed property, nonaccrual.
Mortgage Late Payment In some cases, the amount charged for late payments is also limited by state law. On most types of loans, the late charge is only applied to principal and interest. Let’s say you have a $1,000 monthly mortgage payment based on principal and interest. If the late charge is 5%, you’re out $50 additional dollars.
(2) A prepayment penalty as provided in the note or other form of contract signed by the borrower on any amount that is voluntarily prepaid; provided that:.
Prepayment penalties might be hidden, but they must be stated, so if a loan contains a prepayment penalty, it will be noted in the agreement. 3 One type of major installment loan, student loans, should not have any prepayment penalties.
Definition of "Prepayment Penalty" Terry Company, Real Estate Agent RE/MAX . A charge imposed by the lender if the borrower pays off the loan early. The charge is usually expressed as a percent of the loan balance at the time of prepayment or a specified number of months’ interest. Some part of.
For example, the definition of a home includes not just a typical single. subject to the $100,000/$50,000 limit. But if there is a prepayment penalty, you can deduct this as home mortgage interest.
The definition of what constitutes partial pre-payment varies from bank to bank. This will ensure savings in. This will ensure savings in. The "Yield Maintenance" prepayment penalty is the calculation of that lost income, which is a factor of the original rate, current market rates, and the remaining term of the loan.
prepayment penalty: A penalty sometimes charged to a borrower who makes a prepayment.