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Alex Esquire
Alex Esquire, Attorney at Law
Category: Real Estate Law
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Experience:  Experienced Licensed Attorney / Real Estate Law Mentor
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I live in Hawaii, Maui, I purchased a house in October 2012

Customer Question

Hello, I live in Hawaii, Maui, I purchased a house in October 2012 for 625,000. I put down 200,000. dollars and agreed to a 5% loan, 15 years( carried by the previous owner).
We went through a title and escrow "Fidelity" to sign papers. I also signed a paper, (here's the problem) regarding a prepayment penalty over the life of the loan. I want to refinance now to get a lower rate.
I need to know if a prepayment penalty of 10%(year 1), 9% (year 2) etc, down to end of loan is legal... Is there any way for me to get out of the exorbitant ($43,750.00) prepayment at this point?
Submitted: 11 months ago.
Category: Real Estate Law
Expert:  Alex Esquire replied 11 months ago.

Hello. My name is Alex.
Thank you for your question.
I will be happy to provide you with information you are seeking for educational purposes only.

Unfortunately, prepayment penalty is perfectly legal, as long as, it was disclosed to the borrower and borrower signed a mortgage loan agreement which contained prepayment penalties terms.

I am very sorry to provide you with this bad news, but please understand that I do have professional obligation to provide customers with correct answers, even when answer is not favorable to the customer.

I wish you the best of luck and God bless you!

Expert:  Alex Esquire replied 11 months ago.
Expert:  Alex Esquire replied 11 months ago.

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