Can You Pay Off a Mortgage Early without a Penalty?
Two main types of mortgages exist, fixed-rate and variable-rate. Homeowners can pay off a mortgage early. However, some incur a penalty.
A fixed-rate loan is a contract between a homebuyer and their lender. It’s also a contract between the lender and a wholesaler. To give the homebuyer a fixed rate, the lender borrows the funds from a wholesaler at a fixed price. If the lender breaks the contract, they incur a fee with the wholesaler.
Sometimes homeowners need to exit their fixed-rate mortgage. If they come into an inheritance or settlement, it makes sense to pay off their debts. Even though the reason for paying off the home loan is legitimate, they incur the break cost fees. However, the money they save often pays for the fees.
Variable-rate mortgages do not incur break cost fees. The homeowner can pay off the mortgages before the term. In many cases, it’s an available feature.
All mortgages carry a set of pros and cons. Mortgage House works with homebuyers and investors. Our loan specialists evaluate the individual’s application and find the loan products that fit the circumstances and goals best.
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Pay off a Mortgage Early Conclusion
Homeowners who wish to pay off a mortgage early can. If you wish to avoid paying a penalty, you must check the parameters of your home loan first. For the most part, variable-rate mortgages do not penalize homeowners. To obtain more information, contact our Mortgage House loan specialists. They can review your current mortgage and offer suggestions.