Prepayment Penalty Date Wrong?

I bought my house on Sept 28,2006. I am in the process of refinancing it already after 1 year and 5 months. Here's the question. On my prepayment penalty clause I have an "addendum" that is dated Sept 28, 2009. It says that AFTER 24 months of "said" date I could prepay without penalty. Can they "predate" these clauses? Is this supposed to be a 5 year "hold-down?." If i prepay within first year AFTER said date it is 2% of principal remaining, prepay within 2nd year it is 1%, and within 3rd year ...no penalty. The year 2009 is baffling me. What if I pay it now? I'm not technically within the first year of 2009 until October 1st of this year. It doesn't stipulate paying before, it says AFTER said date. Is this a typo? There are no fees associated with paying before the said date. They can't "forbid" me and refuse to let me refinance until after "said" date can they?.......Any help is appreciated.

Prepayment Penalty Date Wrong?
I am not sure why you are asking. You printed the answer.





After October 2008 you have no penality.





As you are in the second year the panality to refi is 1% of your loan amount.
Reply:hmm- because its a addendum which means changes to the original contract- yes they can post date it - but this is VERY unusual. normally there would be a very long clause about the post dating.


So it is very possible that the dating was mis typed, its my guess that it was mis typed especially since the 6 is right below the 9 on a keypad.


Also- read over the original contract carefully to be sure that it doesn't include pre-payment penalty statements that will occur before this post-dated document kicks in.


Just so ya know the average mortgage has a clause about pre-payment penalties- and every one is the same- with a prepayment penalty occuring during the first 1-5 years.


The way they think of it is- they want to make decent amount of money off you- so if you are going to refinance somewhere else within a couple of years- then they are going to recover that money by charging the penalty. I have been a investor for 10 yrs, agent for 5 and consultant for 3- and have only heard of a prepayment penalty starting after a couple of years when a mortgage is held by a personal party (not a bank).


I dont know where your from so i couldnt say for sure- but i would recommend contacting the attorney that did your closing- they will know local law and standards and can probley tell ya quickly if this is a typo. and usually they will not charge if they already did the closing paperwork.


if there is a pre payment penalty- i would recommend holding off on that refinance for a while if you have decent credit because rates are expected to hold if not drop within the next few months. now if you have fair credit- or no equity - it might pay off in the lon\g run to just pay the penalty and refinance now.