Finance
A North Dakota homebuyer's mortgage has a prepayment penalty. This means the borrower:
ACannot make extra principal payments under any circumstances
BMay be charged a fee for paying off the loan earlier than scheduled✓ Correct
CMust maintain the loan for at least 10 years
DCannot refinance with the same lender
Explanation
A prepayment penalty is a fee charged by some lenders when a borrower pays off part or all of the loan balance earlier than the scheduled payoff date. Lenders use this to recoup anticipated interest income lost from early payoff.
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