Finance
Iowa's prepayment penalty on a residential mortgage loan is:
ARequired by Iowa law on all fixed-rate mortgages
BLimited or prohibited for certain loan types including qualified mortgages, protecting Iowa borrowers who pay off loans early✓ Correct
CAlways 6 months of interest regardless of loan terms
DDetermined solely by the Iowa Finance Authority
Explanation
Federal qualified mortgage (QM) rules limit prepayment penalties: they are prohibited on QMs with terms over 3 years, and restricted on shorter QMs. Iowa conventional mortgage lenders must comply with these restrictions, protecting borrowers from excessive prepayment costs.
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