Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in

Ask Dave

Taking The Penalty

Josh is afraid to pay his second mortgage off early, because of the loan prepayment penalty that goes with it.

QUESTION: Josh still has a second mortgage to pay off, but there’s a loan prepayment penalty to pay it off early. They owe $23,000 on it and make $60,000 a year.

ANSWER: If there is a penalty for prepayment, but not one for partial prepayment, then you can pay extra until you get the balance low and then write a check to pay it off. Usually a prepayment fee is associated with a subprime loan. Call them and say you want the penalty fee waved, and if they do, you’ll pay it off because they need the capital. Put pressure on them; don’t call them once, but 10 times. In the meantime, pay extra payments and get the balance down. If you have a penalty at that point, just pay it off.

Thank you! Your guide is on its way!

Want to Buy a House With Confidence?

Want to Buy a House With Confidence and Peace of Mind?

Want to Buy a House With Confidence and Peace of Mind?