Posted on: 26th Aug, 2008 06:26 am
I have an owner financed mortgage of $20,000.00 at 10% for 23 years with a pre-payment penalty clause. If I sell my home, does this constitute early payment of the loan? I am in the State of Florida. The owner's attorney is telling me the loan payoff amount is $ 66,795.00, but I thought it was not the same if you sell the home vs. paying off a loan early to get out of the loan. I just want to sell my home.
Hello oshaugnessy,
Since laws & regulations vary by state & locale your best bet here is probably to reread your loan documents pertaining to the prepayment clause. Generally prepayment of your loan would include a sale since the goal is to pay off the balance ending the loan obligation.
If you still have questions it sounds like it might be beneficial to consult another attorney (one other than the seller's) for clarification. Even if you pay for the consultation (you might be able to get a free consultation) there's a lot of money involved here.
Since laws & regulations vary by state & locale your best bet here is probably to reread your loan documents pertaining to the prepayment clause. Generally prepayment of your loan would include a sale since the goal is to pay off the balance ending the loan obligation.
If you still have questions it sounds like it might be beneficial to consult another attorney (one other than the seller's) for clarification. Even if you pay for the consultation (you might be able to get a free consultation) there's a lot of money involved here.
Thank you for your quick response. At this time the mortgage simply states "no prepayment allowed". I have contacted a different attorney - and I am also trying to renegotiate the prepayment penalty clause with the owner 'sans her attorney'. Thanks again.
Welcome Donna.
A prepayment is all about paying off the loan early, be it through the home sale or with your own funds. But when the contract states "no prepayment allowed", then I don't think it allows you to sell the home now. But if you do so, it will be a violation of the contract and hence the owner can ask you for a penalty. Let's the hope the attorney is able to negotiate with the owner.
All the best :)
A prepayment is all about paying off the loan early, be it through the home sale or with your own funds. But when the contract states "no prepayment allowed", then I don't think it allows you to sell the home now. But if you do so, it will be a violation of the contract and hence the owner can ask you for a penalty. Let's the hope the attorney is able to negotiate with the owner.
All the best :)
how does the payoff go from a balance of $20K to an overall total of $66K?
that seems most unreasonable.
that seems most unreasonable.
Not just unreasonable but illegal
