Does the loan have a prepayment penalty?
This refers to your ability to make extra principal payments at any time or pay off the loan early without penalty. Read your contractual agreement carefully for any prepayment penalties. Indiana and other states have limits on prepayment penalties on second mortgage loans and some states do not allow them. Shop Around Before you consider any home improvements, you should shop around. When you have found an improvement company that meets your needs, call your local Better Business Bureau or ask them for references. Make sure they are bonded or insured. Will they guarantee their work? When you initiate a conditional contract for home improvements, be sure you understand all of the provisions. Some contracts are not completed until the home improvements are completed. Some contracts are completed when the improvements are agreed upon with payments not to begin until the improvements have been completed.
You will want to know if your loan has a prepayment penalty. These penalties can be sustained by any number of activates associated with the mortgage. If your loan does have one, check to see what it is because the penalty can vary a lot. Sometimes you will have to pay 1% of the mortgage amount, where as other times the penalty can be as much as 6 month’s interest. Know what, if any, prepayment penalties are attached with your mortgage. Know what the length of each one is and how it is determined. Sometimes if a buyer assumes these penalties, the lender will lower the interest rate on the loan.
