Prepayment Penalty Quiz

a fee for all the tasks involved in creating your loan

a contractual clause that states the borrower is going to pay the lender an additional fee if the borrower pays the loan off early

a penalty the lender charges if the appraisal comes back less than the property minimum

a contractual clause that states a fee the borrower will pay any time they pay off the loan

30-Yr Fixed

5/1 ARM

7/1 ARM

Both 5/1 ARM and 7/1 ARM

3/2/1

0/0/0

5/4/3/2/1

3/0/0

To protect the lender from financial loss if the borrower pays back the loan early.

To protect the borrower from making poor financial descisions

To protect the borrower in the case their appraisal comes back low

To protect the borrower in the case they cannot be verified as the rightful title owner