Can I pre-pay my mortgage?

Mortgage and Lending with Bay Equity, LLC 770-634-4021 NMLS #206275 GA 25689

Can I pre-pay my mortgage?  That was the question a former client called to ask this week.  She received a letter stating that her loan had been sold to a new company.  Then a few days later she received a statement from the new lender that discusses how payments could be made, contact information etc.  Buried in the documentation was a sentenance that said she could not pre-pay the mortgage.  

The answer for her question was simple.  The terms of the mortgage are spelled out in the note that was signed at closing.  It will state the amount of the loan, the interest and the repayment options.   Regardless of what the lender said in the letter, the note should be the deciding factor.  This was a standard conventional Fannie Mae loan product.  There is NO pre-payment penalty.

If you aren't sure about the terms or conditions regarding your repayment, it is best to go back the closing documents.  You should be able to find your answer there.  If not, call a trust licensed mortgage loan originator for help.


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Kathy Sheehan Senior Loan Officer






Bay Equity LLC

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11475 Great Oaks Way, Suite 350, Alpharetta, GA 30002

800.BAY.3703 Bay Equity LLC NMLS ID#76988



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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.



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Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Kathy, thank you for sharing this information.  Most people receiving a letter like this would ask the same question. Now your readers have the answer.  Suggested!

Nov 21, 2013 10:36 AM #1
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

For the life of me I cannot see why anyone would take a loan with a pre payment penalty. 

Nov 21, 2013 10:39 AM #2
Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer

Thanks Sharon.  I am sure some would not even question it.

Joyce, some of the jumbo products do have a pre-payment penalty, but not the conforming products.

Nov 21, 2013 11:10 AM #3
Robert Fowler -
President of Retirement Media Inc. - Braselton, GA
55+, Active Adult and Retirement Communities

Kathy what a helpful answer!  Many of us can use that info.  Paying down a mortgage is one of he best thing you can do with extra money these days, IMO.

Nov 21, 2013 09:15 PM #4
Connie Harvey
Pilkerton Realtors - Brentwood, TN
Realtor - Nashville TN Real Estate

Kathy, do many lenders still have pre-payment penalties?

Nov 21, 2013 10:52 PM #5
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Kathy -- one of the questions I ask of a homeowner thinking of selling is if there is a pre-payment penalty on their loan -- there are not many out there but they do exist.   

Nov 23, 2013 12:02 AM #6
Terri Poehler
Realtor - Coral Springs, FL
Coral Springs Real Estate Agent

I never really understood their usefulness. We're supposed to pay debt off.

Aug 13, 2014 09:11 PM #7
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Kathy Sheehan

Senior Loan Officer
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