Finance
In Michigan, a 'prepayment penalty' in a mortgage means:
AThe borrower receives a discount for early payment
BThe borrower may owe an extra fee for paying off the loan early, depending on loan terms✓ Correct
CAll mortgages require 30 days notice before payoff
DThe lender can raise the rate if the borrower pays ahead
Explanation
Some Michigan mortgage products (especially non-QM or older loans) include prepayment penalties that charge borrowers a fee for paying off the loan ahead of schedule, discouraging early payoff. Many conventional and FHA loans do not have prepayment penalties.
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