DSCR Loan Prepayment Penalty
Many business-purpose DSCR loan programs include prepayment penalty structures, which may apply if the loan is paid off or refinanced within a certain period. Structures vary by program and can sometimes be adjusted. Any applicable prepayment terms are disclosed as part of the loan process.
Key Takeaways
- Prepayment penalties are common on business-purpose investor loans.
- They may apply if a loan is paid off early within a set period.
- Structures vary and can sometimes be adjusted.
- Applicable terms are disclosed during the loan process.
What a Prepayment Penalty Is
A prepayment penalty is a charge that may apply if a loan is paid off or refinanced within a defined period after closing. Prepayment structures are common on business-purpose investor loans and are used to reflect the investment nature of these loans.
How Structures Can Vary
Prepayment structures vary by program — for example, in how long they last and how the charge is calculated. Some programs allow adjustments to the structure, which can affect pricing. Any applicable terms are disclosed as part of the loan process so borrowers can review them.
Frequently Asked Questions
- Can prepayment penalties be avoided?
- Some programs allow adjustments to the prepayment structure, which can affect pricing. Whether an adjustment is available depends on the program and scenario.
Have a specific property in mind?
Run your scenario or talk through the details with our team.
This article is for general educational purposes only and is not financial, legal, tax, or lending advice, a commitment to lend, or an offer to enter into a rate-lock agreement. All loans are business-purpose investor loans subject to underwriting, property review, investor guidelines, and applicable law. Program availability and terms vary by state and transaction. Simple DSCR is an assumed business name of WooHoo Mortgage LLC, NMLS #2347993.