What are hard and soft mortgage payments?

To explain hard vs. soft prepayment penalty on a mortgage loan, imagine that you sign a home loan and you have a prepay penalty clause of 4-month interest due if you sell the property within three years, or if you refinance. That will be a hard penalty.A soft penalty is when you are penalized only if you refinance prior to a fixed period (usually 2 to 5 years). However, no penalty charge will be incurred if you sell the house right after you got the mortgage loan and bought that home. Most conventional lenders these days do not impose prepayment penalties, as it is not fair to the consumer. I suggest you look for a different lender who does not have these prepayment penalties. Give us a call at 877-834-3340, we can offer you several options for loans without any prepayment penalties at great rates.

Josephh explained this perfectly and concisely. The main point here is, there is really no need to have a prepayment penalty anymore; most lenders have done away with these. Not having all the information, I will note there must be something special about this loan you're discussing, since it's obviously some kind of portfolio/niche product. Make sure you understand WHY you would want to take that loan vs. a more conventional/standard product that doesn't have a prepay penalty. I can only think of a couple lenders (most of their customers are web only) that still offer these kinds of loans...and you pay way more than you should for their services, even on a standard loan product. You definitely need to be shopping around a little; give Joseph a call and ask your friends/family/co-workers if they know a good loan officer they can refer you to...a lot of the best loan officers get the majority of our business through word of mouth/referrals. Once you get a little more feedback about your specific situation, you'll be able to make a better decision about the best loan for you.

No one has prepayment penalties except commercial loans and private money lenders.Joesph & Brett are incorrect on the two terms.A hard prepay is the fee you pay when you refinance prior to the prepayment penalty's expiration.A soft prepay is allowing the prepay to be waived when the loan is paid off due to the sale of the property.

Forgot one item. A hard prepay would also be paid upon the sale of the property.