Loans By Kathy: Can I pre-pay my mortgage?

Can I pre-pay my mortgage?

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.


Comment balloon 7 commentsKathy Sheehan • November 21 2013 06:21PM


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!

Posted by Sharon Parisi, Dallas Homes (United Real Estate Dallas ) almost 6 years ago

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

Posted by Charles Stallions Real Estate Services, Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl. (Charles Stallions Real Estate Services Inc) almost 6 years ago

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.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) almost 6 years ago

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.

Posted by Robert Fowler -, 55+, Active Adult and Retirement Communities (President of Retirement Media Inc.) almost 6 years ago

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

Posted by Connie Harvey, Realtor - Nashville TN Real Estate (Pilkerton Realtors) almost 6 years ago

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.   

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 almost 6 years ago

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

Posted by Terri Poehler, Coral Springs Real Estate Agent (Realtor) about 5 years ago