Can anyone explain to me how prepay’s in Florida work? I know the standard prepay is three years but is it a hard prepay (6 months worth of payments) for the first two years then teh third year is a soft prepay (3 months worth of payments) not sure how it works exactly. Thank you
PPP can very in terms you do not have to have a 3 ppp you can buy them out with points or you can get a slightly higher rate just to get out of the PPP usually a .25% per year + or - depending on the lender
Some lender have the 3 yr PPP with a 6 mon hard PPP which means if you refi or sell the property you will pay the 6 mo intest payments in just the first 6 mo.
and then after the 6 mon then it turns into a SOFT PPP which means when you sell the property they will not enforce the PPP.
and if you refi you would be stuck with paying the PPP
Prepay penalties vary according to the lender. Anywhere from 1-3 years usually. Prepay penalties should be your choice on every transaction and will result in a lower interest rate or better terms.
Hard prepay= you are penalized if you refinance OR sell the property.
Soft prepay= you are penalized only if you refinance. You are not penalized if you sell the property with a soft prepayment penalty.
A good broker will make you aware of your options and the positives and negatives of accepting a prepayment penalty.