Prepayment Penalties (PPPs)

<< Back to the Seven Signs of Predatory Lending

A prepayment penalty is a fee required by the lender when borrowers pay off a mortgage loan early. In the subprime mortgage market, where borrowers tend to have less-than-perfect credit, an abusive prepayment penalty can trap them in a high-interest loan even after they improve their credit rating. This penalty is seldom imposed in the conventional mortgage market.

Wondering whether your loan includes a prepayment penalty? Use our illustrated guide to find out.