ray363•19d ago

The day I stopped ignoring the prepayment penalty fine print on my second mortgage

I used to just skim over the closing documents on my loans. I figured the interest rate and monthly payment were the only numbers that mattered. That changed about two years ago when I refied a rental property in Phoenix. The broker mentioned something about a prepayment penalty but I waved it off. Six months later I tried to pay off the loan early and got hit with a $4,500 fee. Now I read every line of the disclosure paperwork, especially the sections about early payoff terms. I even call the lender directly to confirm what happens if I pay extra each month. Has anyone else gotten blindsided by a prepayment penalty they didn't expect?

3 comments

3 Comments

evan_wilson1819d ago

Watched my brother-in-law sign up for a gym membership last month without reading anything past the monthly price. Three months later he found out there's a hundred dollar cancellation fee and a whole process about giving notice in writing. Same exact thing happens with phone contracts and those internet bundles that hook you with a low rate then jump up after a year. We just get comfortable trusting the first number we see and forget that every single deal comes with a catch buried somewhere.

cooper.phoenix19d ago

That line about "every single deal comes with a catch buried somewhere" hits the nail on the head. A buddy of mine signed up for a "free" trial of a meal kit service online and forgot to cancel after the first week. Ended up getting charged for three months of boxes he never wanted, took him an hour on the phone to stop the payments.

bettyfox19d ago

Never really gave much thought to how companies hide these fees until I read what happened to @evan_wilson18's brother-in-law. That hundred dollar cancellation fee is a nasty surprise, and it made me realize I've probably signed a few things without looking at the fine print myself. These days I take an extra five minutes to read every paper or link before I put my name on it.