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LendingRisk.com Mortage Industry Dictionary

Terminology, definitions, terms, explanations, and documents for business professionals in the mortgage lending and mortgage risk management industries.

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Prepayment

In the mortgage industry, the term Prepayment is used synonymously with the terms: Borrower Runoff and Early Payoff. In the mortgage industry, the term Prepayment is typically used in reference to the process whereby a borrower refinances their current mortgage for a better offer with a different lender. Prepayments might also occur as a result of the borrower making extra payments or selling the property. Prepayments represent an increasingly expensive challenge to lenders, as most investors will require their sellers to repay any premiums for loans that prepay.


See Mortgage Loan Early Payoff Overview
See Borrower Runoff
See Early Payoff
See Prepayment Penalty

Prepayment Penalty

(1) Fees paid by the borrower if they pay the loan before its due date.

(2) Fees paid by the seller to the investor if a loan originated by the seller is paid off before its due date.

See Mortgage Loan Early Payoff Overview
See Borrower Runoff
See Early Payoff
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Terminology, definitions, terms, explanations, and documents for business professionals in the mortgage lending and mortgage risk management industries.