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Updated over 1 year ago on . Most recent reply
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Lender Pause on Refinance Loan Products - Prepayment Penalty Still in Effect?
Hello,
We want to cash-out refi a 6-unit building that has a 2% prepayment penalty if refinanced outside of original lender. They informed me they have looked through their portfolio and currently are on pause for investment properties.
They informed me the 2% prepayment penalty is still in effect. Anyone have experience with this scenario before? IMO, it seems logical that the clause would become void if the original lender issued a freeze of the loan product they require you to use to avoid penalty.
Thank you!
Most Popular Reply
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Quote from @Sam Yin:
@Ian M Crawley
I think there are two different things going on here.
1. They have a prepay penalty for refi outside of their bank.
2. They are currently on pause with new loan products.
These two things are not related. You WANT to refi but it is not their problem. They just told you that any refi outside of their institution requires a prepay.
This is just my opinion based on the OP. But I could be wrong.
You have it correct, Sam. It seems best case scenario I would have an uphill legal argument that would more than likely be a waste of time & money.
Not the end of the world. Just wanted to get others opinions and confirm I should take the penalty.