Question: There is a law on the books regarding home mortgages which states that if a loan has a pre-payment penalty, then it must be assumable. This is why the vast majority of mortgages no longer have pre-payment penalties.
Now that’s interesting, and I hadn’t heard it before although my two mortgage loans would bear this out. Is this a state or Federal law?
Answer: I wish I could provide a reference, but it’s something I read in a financial advice column years ago. Considering how rare assumable loans are, I never had any reason to doubt it.
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