Finance
A prepayment penalty on a mortgage charges the borrower for:
ABeing late on monthly payments
BPaying off all or part of the loan balance earlier than scheduled✓ Correct
CFailing to maintain required property insurance
DRequesting a loan modification
Explanation
A prepayment penalty is a fee charged by the lender if the borrower pays off the loan (or a significant portion of it) early. This compensates the lender for the interest income they lose due to early repayment.
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