Finance
In South Carolina, 'prepayment penalties' on mortgages:
AAre required by state law on all mortgages
BAre permitted on some loan types but restricted or prohibited on others under federal law✓ Correct
COnly apply to commercial loans
DMust be disclosed in the listing agreement
Explanation
Prepayment penalties are regulated by federal law (Dodd-Frank Act). They are prohibited on certain qualified mortgages (QMs) and FHA/VA loans, but may be present on some non-QM loans.
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Key Terms to Know
Listing Agreement
A contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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