Legal Question in Real Estate Law in North Carolina
borrower's right to prepay
I am doing a refinance on my home on a 30 year fixed loan which is supposed to close tomorrow.
In the borrowers right to prepay section on the note, i am confused by the following part '' the note holder will use my prepayments to reduce the amount of principal that i owe under this note. however, the note holder may apply my prepayment to the accrued and unpaid interest on the prepayment amount, before applying my prepayment to reduce the principal amount of the note.'' Does this mean that the lender is going to charge me for the entire interest that they would have recieved had i just made my payments with no prepayment whatsoever for 30 years? Thank you in advance for clarification on this question.
1 Answer from Attorneys
Re: borrower's right to prepay
Really you should ask this question to your closing attorney and if you are using a title company and not an attorney, I would advise against it.
In any case - accrued and unpaid interest means what is says - interest that has already accrued but not yet been paid. So you do not pay interest for the entire 30 years when you prepay.
- Jeff
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