Loan On House
Does any know of a way to get out of paying a prepay penalty on house loan?
I have an interest loan for $158,000 and second for 39,500 to which i need to pay 5% on both if I pay before five years o refinance.
The easiest way to avoid the prepay penalty is to sell the home.
However, if you’re upside down in the property, i.e., the home is worth less than what you owe, then, some states have antideficiency statutes which prevent a lender from collecting any additional money from a borrower who defaults on a home loan. If you are in one of those jurisdictions, and your home’s equity is maxed out, so you can’t get any more out of a sale or refi, then you could just call the lender and ask to waive the prepayment penalty, and that if the lender refuses, you’ll just walk away from the property and they will be stuck with the loss.
Of course this will also ruin your credit rating for the next seven years, so it’s far better to just sell the property and move on, if you can afford to do so.