Finance
A prepayment penalty on an Indiana mortgage allows the lender to charge a fee when:
AThe borrower misses a payment
BThe borrower pays off the mortgage early — recouping some of the lender's expected interest income✓ Correct
CThe interest rate changes on an ARM
DThe borrower refinances with the same lender
Explanation
A prepayment penalty is a fee charged by some lenders when the borrower pays off the mortgage ahead of schedule. Federal regulations restrict prepayment penalties on certain types of loans.
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