Finance
A Colorado lender charges a 'prepayment penalty' on a mortgage. This means:
AThe borrower must make extra payments monthly
BThe borrower is charged a fee for paying off the loan early✓ Correct
CThe borrower must prepay one year's interest at closing
DThe borrower forfeits the right to refinance
Explanation
A prepayment penalty charges the borrower a fee if they pay off the mortgage early (through a sale, refinance, or extra payments). Colorado and federal law regulate when prepayment penalties can be charged on certain loan types.
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