Lori H Posted February 5, 2003 Posted February 5, 2003 A participant has made six months worth of payments on a 30 year mortgage loan and wishes to pay it off. Would the pay-off amount be the principal remaining or the remaining principal plus the all the interest that would have been due during the life of the loan?
Mike Preston Posted February 5, 2003 Posted February 5, 2003 More than likely the former, but definitely not the latter. In between is possible, also, although not terribly common in a participant loan. If the note that the participant signed calls for a prepayment penalty (which I believe is theoretically possible, although not a common provision) then the amount of the payoff would be the principal remaining plus the prepayment penalty.
Guest Rae Posey Posted February 5, 2003 Posted February 5, 2003 ...don't forget interest due since last payment up until intended payoff date.
mbozek Posted February 5, 2003 Posted February 5, 2003 The purpose of paying off a mortage is to cease paying the interest on the amount borrowed. Why would a debtor prepay a mortgage and pay interest after the borrowed funds have been paid off? The interest due is for the period from the last mortgage payment to the date of the payoff which is added to the outstanding principal to obtain the payoff amount. mjb
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