Legal Question in Real Estate Law in Massachusetts

We are refinancing our primary residence at a lower interest rate in Massachusetts and one of the provisions of the contract under prepayment states: If you pay off early, you

X will not have to pay a penalty.

X will not be entitled to a refund of part of the finance charge.

Is this standard for the industry or something I should/could protest?

Does this mean that if we paid off the house through a windfall of cash in the first year of a 15 year mortgage that we would have to pay the entire finance charge if $41,000. (in this case), anyway?

Asked on 2/06/12, 5:10 am

2 Answers from Attorneys

Alan Pransky Law Office of Alan J. Pransky

This means that if you pay off early you will NOT have to pay a penalty. Ther is no accelleration of the finance charge. However, you are paying some finance charges at the closing. You won't be able to get that money back. These are standard terms that protect you. Don't protect these terms.

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Answered on 2/06/12, 6:10 am

The language means there is no penalty for prepayment. At the time of the closing of the loan you will or may be prepaying some interest and finance charges, those charges will not be returned to you. It does NOT mean you have to pay the finance charges for the entiret term of the loan, if you pay it off early.

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Answered on 2/06/12, 8:21 am

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