Last reviewed 10-31-2026Short-Sale.com Editorialglossary
Prepayment Penalty or Fee
ABA
Updated 10-31-2026
Prepayment Penalty or Fee
a fee assessed by a lender on a borrower who repays all or part of the principal of a loan before it is due. The prepayment penalty compensates the lender for the loss of interest that would have been earned had the loan remained in effect for its full term.
American Bar Association Glossary of Real Estate Terms
ABA · p. 9
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