Mortgage Prepayment Penalty Fees

A mortgage prepayment penalty is a fee for paying off your home loan early, usually within a few years of taking it out. It doesn't apply to USDA, VA, or single-family FHA mortgages. There are soft and hard prepayment penalties, with varying amounts or fixed fees. To avoid them, choose a mortgage without penalties, negotiate with your lender, wait out the penalty period, or make gradual extra payments. Prepayment penalties are legal if disclosed in loan documents, and typically apply even if you refinance with the same lender.