Most companies charge a certain percentage of the loan, often 1 percent or 2 percent, or the equivalent of six months of interest if the mortgage is paid off early “” generally within two to five years.

Local loan experts say they’ve seen prepayment penalties range from $5,000 to as high as $30,000. A prepayment penalty on a subprime loan of $400,000 at 7.99 percent would total nearly $13,000, said Jeff Underwood, a loan officer with AmeriFirst Financial in Mesa.

One step borrowers can take to avoid getting caught off guard is choosing a loan officer they trust instead of just searching for the lowest rate, Underwood said.


If I am your Realtor, please contact some of the lenders on my list of preferred lenders. They’ve done a good job for my clients in the past and they certainly want to do a good job for you… otherwise I’ll quit referring my clients to them.

No referral fees

People are suspicious, as well they should be. Some people have thought that I referred them to particular mortgage lenders because the lenders would pay me a referral fee or something.

Absolutely not! It’s illegal under federal law for a lender to pay a Realtor a referral fee of any kind whatsoever.

The way lenders help me is by giving my clients great service and that helps me a lot.