Finance
A prepayment penalty clause in a mortgage:
ARequires the borrower to pay extra principal monthly
BCharges the borrower a fee for paying off the loan early✓ Correct
CIncreases the interest rate if payments are late
DAllows the lender to call the loan if the property is sold
Explanation
A prepayment penalty penalizes borrowers who pay off the loan before a specified period, compensating the lender for lost interest income.
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