Sidestep penalty for early mortgage payoff

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

DEAR BENNY: I was at the closing table for my condo purchase only to discover that there was a penalty for early payoff. I called the bank immediately and they told me to "take it or leave it." A great idea came immediately in my mind, and I went through with the closing. The bank explained to me that a percentage of the payoff amount is calculated as a penalty. I sent (the bank) a payment for $5 less than the payoff amount. After I made sure that my payment went through, I requested the payoff amount and the penalty. The penalty was, of course, calculated on the remaining amount of $5, and even if the penalty were 100 percent on the balance it would not be more than $5. Maybe your readers will benefit from this story. I want to believe that banks still charge a percentage on the payoff amount and not a fixed fee. --Theo DEAR THEO: You have raised an important issue, namely dealing with any prepayment penalty that a lender imposes. Not every mortgage loan contains...