[quote=teaboy]OK, so I just signed my refinance closing docs and one of the docs I signed reads: The refinance loan or purchase loan with Bank/Investor is at No prepayment penalty. However, Bank/Investor or
its successor lender requires the borrower to stay with them for 190 days before they can refinance with other banks.
The borrower has to pay 5 (five) full payments to the new investor after the close of the transaction. If borrowers
choose to pay off the remaining balance or sell the subject property within 190 days, the borrowers have the liability
to pay 2.0% penalty of the loan amount.
I dont remember seeing this the last time I refinanced, which was less than 190 days ago…
Is this typical or even legal? If so, I should probably use my right to cancel…
Help!
tb[/quote]
To me all the words after “No prepayment penalty” are describing a pre-payment penalty. So if this clause is legal it is essentially equivalent in all cases to a pre-payment penalty, with the exception (I guess) of simply paying it off in full with proceeds from anything other than a refinance or sale.
