What is a prepayment penalty waiver and how can I get it?Answer:
A prepayment penalty waiver is a case where the borrower, who wants to pay the loan back before it is due, is not charged a prepayment penalty which is present in the mortgage agreement. This is a very rare case as lenders lose value on their pool of mortgages in the secondary mortgage market if they stop applying the prepayment penalty.
There is only one way that you can get a prepayment penalty waiver and that is if the lender agrees to let you walk free. This means that you have to convince the lender to waive off the prepayment penalty and you can do that in four ways.
Ways to Get a Prepayment Penalty Waiver
If you do not pay off the entire loan then you can convince the lender that you are still going to be making monthly payments and keep the relationship going.
with the same lender:
If you refinance your mortgage with the same lender there is a good chance of getting a waiver on the prepayment penalty. This is because lenders would want to make some concessions in order to keep their long term relationship with borrowers and with that their continuous revenue stream.
Go to court:
You could take legal action against the lender claiming the penalty to be unjust. Courts have ordered lenders to waive prepayment penalties in the past, though it should be noted that that has happened very rarely. Also, the cost of the legal procedures would have to borne by you and they might be greater than the prepayment penalty itself.
community group to intercede:
You could involve a community group in the process to increase the weight of your request. They intervene on behalf of the borrowers if they deem the original terms to be unreasonable and unfair.
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