Is Prepayment Penalty on Mortgages in NJ allowed ?
I am about to get a mortage for a condo in New Jersey.
I will be putting down pretty good down payment but still will have mortage of 300k.
I plan to pay it off within 2-3 years.
Does NJ limit the amount I will be charged for paying it off early ?
Thanks !
Answer:
"It has nothing to do with the State you live in, it's the type of mortgage you take out. I would talk to a mortgage lender or broker and not rely on advice given in this forum. I've suddenly realized how many punky kids are on here with their smart alec answers, they have no idea what they're talking about."
I'm sorry to break the news to you, but being in New Jersey has everything to do with it.
But I do agree that a lot of punks are on here giving smart alec answers. I see people here give horrifying advice that could get someone arrested or sued, and much of it is accompanied by a "true" story of what their friend, uncle, etc did.
Anyway, the New Jersey Real Property Code, N.J.S.A. 46:10B-1 et. seq. and the Licensed Lender Act, N.J.S.A. 17:11C-1 et. seq. both cover the subject of prepayment penalties in exquisite detail.
N.J.S.A. 46:10B-2 allows a borrower to prepay a mortgage loan at any time without a penalty or fee. There are certain restrictions, such as the the mortgage must be on a single family or a building with no more than 6 units.
Alternative Mortgage Transactions, or AMT's for short (balloons or ARM's) may charge a prepayment penalty. This has been ruled upon in NJ, but case law is ever changing things. This only applies to federally chartered lenders in NJ.
In other words, if you don't want a prepayment penalty in NJ, get a traditional mortgage with any lender or an AMT with a state (not federally) chartered lender.
The location of the property, NOT not the type mortgage determines which state's banking laws apply. The type of loan is the secondary issue, not primary.
It has nothing to do with the State you live in, it's the type of mortgage you take out. I would talk to a mortgage lender or broker and not rely on advice given in this forum. I've suddenly realized how many punky kids are on here with their smart alec answers, they have no idea what they're talking about. Wow you must have a really high paying job to pay off a $300k mortgage in 2-3 years, why even take out a mortgage? (Just curious). Just stay where you're at, save your $$$ and buy a condo for cash in 2-3 years. Better yet, move somewhere else and you could buy a regular house for less than that, why an expensive condo?? Housing prices are going down all over the US now. in a couple of years, they will be even lower.. :-)
check with your lender ..some lender limits how much you can pay extra in any given year.
Why pay it off, having some mortgage gives you some tax deduction advantage
You may have a pre-payment is the bank or funder that you use is Federal ch. In general most banks and funders go by state law. NJ state law does not allow a pre-payment . The best way to find out is to ask.
yes they are, you have to read the contract and refuse the prepayment penalty. Most reputable banks do not have no prepayment penalty, but the mortgage brokers do. If you can pay it off in 2-3 yrs you must make about $150-200K, so there are no tax advantages for you.
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