OfflineIn reviewing this story from Dean's book I have a question.
On page 172, just before the story on page 178, Dean talks about "pre-payment penalties".
In Dean's story on page 178, he indicates he obtained a 100% financing loan (80%/20%), but then sold the home in 45 days. How did he get around the pre-payment penalty which can be the equivalent of 6 months to 1 years worth of payments?
This was not offered as part of a worse-case scenario with a back-up plan after the story.
So what if your worse-case scenario is a pre-payment penalty? You can't rent the home as the rent won't cover costs, so what is a back-up plan for this situation?
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Some mortgages have pre-payment penalties, while others do not. From my experience, the in-house bank loans generally have a pre-payment penalty.
I don't know exactly, but I do know that each transaction is different. You have to evaluate on a deal by deal basis. If there is a penalty, then that you can't get around, run your numbers to see if the deal still works. Depending on who is carrying the mortgage, then some institutions are more flexible than others.
Hope this helps,
Stephan Roberts
"In absence of clearly defined goals, we become strangely loyal to performing daily acts of trivia!"
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