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Check the fine print Posted by Bill Homer [Email] (#3427) [Profile/Gallery] (more from Bill Homer) on Tue, 28 Mar 2006 15:24:53 In Reply to: It's weak. I'm not even a subprime borrower, NickR, Tue, 28 Mar 2006 14:42:11 Members do not see ads below this line. - Help Keep This Site Online - Signup |
I am not a mortgage broker, this is based only on what I have experienced, please do some additonal research and read the exact terms of your loan. That said: The prepayment penalties on ARMs are usually time-limited, i.e. one or two years, and are designed to discourage people from taking out a loan at a "loss leader" rate (say 1%), using the money for some purpose like buying a CD or bond, and paying off the loan before it kicks up to a more normal interest rate. Note that prepayment penalties are against the law in some states. You have to read the loan papers to get a better idea of the penalty on yours!!!
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