Difference between revisions of "Mortgages and Foreclosure"

Mortgages and Foreclosure (view source)

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 ==== Prepayment rights====
-One of the most important aspects of consumer mortgages is the '''right to prepay the mortgage''' (see the section on Prepayment Rights). A '''closed mortgage''' is when the parties agree that the borrower has no right to pay out the mortgage earlier than the end of the mortgage term (for example, one, two, or five years). An '''open mortgage''' is when the parties agree that the borrower can, if they want to, pay out the mortgage during the term of the mortgage.
+One of the most important aspects of consumer mortgages is the '''right to prepay the mortgage''' (see the section on [[Prepayment Rights]]). A '''closed mortgage''' is when the parties agree that the borrower has no right to pay out the mortgage earlier than the end of the mortgage term (for example, one, two, or five years). An '''open mortgage''' is when the parties agree that the borrower can, if they want to, pay out the mortgage during the term of the mortgage.
 Because prepayment rights benefit the borrower, most lenders charge a higher rate of interest for open mortgages, particularly for ones with longer terms. Some lenders offer a compromise between open and closed mortgages: mortgages that give a partial right of prepayment. A lender may agree to accept additional payments during the term of the mortgage (for example, 15% of the balance owing, in any 12-month period without penalty).