Prepayment penalty
A fee for paying off a loan early, through a sale, refinance or large extra payments. It is rare and limited on most home loans today but common on investment and commercial loans.
Also called: prepay penalty, prepay, yield maintenance
Related terms
Replacing your current mortgage with a new one, usually to get a lower rate, change the term, or drop mortgage insurance. It comes with new closing costs, so the savings need to outweigh them.
An investment property loan qualified on the rental income the property produces rather than the borrower's personal income. Lenders look at whether rent covers the payment by a set ratio.
A mortgage that does not meet the federal qualified mortgage rules, often used by self-employed borrowers, investors or people with recent credit events. It allows other ways to document income but usually costs more.
Paying a lump sum toward principal and having the lender recalculate your payment over the remaining term at the same rate. It costs far less than refinancing, but not every lender or loan type allows it.
Property used for business or to produce income, such as offices, retail, industrial buildings and larger apartment complexes. It is usually valued on its income and financed with commercial loans.