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Anticipation
Paying the amount one owes before it is due. Although this
can result in a savings on interest charges, it can result
a Prepayment Penalty.
Example:
Abel borrowed $200,000 last year at 6% interest on a 30-year mortgage. If he pays the remaining Principal now, in one lump sum, there will be a 5% prepayment penalty that amounts to $10,000.
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