How to know if there is a prepay?

When writing up the loan summary, I know I need to add in some padding for the prepay penalty. My question is:

  1. What is the forumla for figuring this amount out?

  2. How do I even know if there is a prepay?

  3. If I do pad in a prepay for the payoff amount and it is later determined at funding that there is no prepay, is it possible for the payoff amount to be lowered? I’m asking in case the owner doesn’t want that cash out.

Sometimes…If the county recorder has the documents online you can view the mortgage and see if there is a pre-pay.

Even if there is not a pre-pay, 9 times out of 10 there are payoff fees. I always pad by about a grand.

How do I even know if there is a prepay?

Order a payoff and you will find out.

How long ago was the current mortgage opened?

Just off the bat, if the borrower has less than peachy credit then chances are he/she has a prepay. If they’re A paper then there’s a lesser chance of prepay. Subprime almost always has a prepay. But always verify things first before you assume but this should give you a working idea.