Prepayment Penalty
Quick Summary
A cost triggered when loan is paid off before term-end.
ELI5 Explanation
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You pay a fee for ending the mortgage earlier than agreed.
Detailed Explanation
Private commitments often include a minimum interest period or fixed months of interest on early payout. Terms vary by lender and deal type.
Example
A commitment may require minimum three months of interest even if sold after six weeks.
Why It Matters
It affects the true cost of early refinance or sale.