Prepayment in Relation to HUD 232 Financing is paying off a loan balance before maturity (the end of the loan term). HUD 232 loans usually have prepayment penalties, which are often negotiable, but usually have a two-year lock out period followed by a 8%- 1% step down premium (i.e. 8,7,6,5,4,3,2,1).

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The main benefit of prepayment in HUD 232 financing is that it allows borrowers to pay off their loan balance before maturity (the end of the loan term). This can be beneficial for borrowers who have the financial means to do so, as it can help them save on interest payments. Additionally, HUD 232 loans usually have prepayment penalties, which are often negotiable, but usually have a two-year lock out period followed by a 8%- 1% step down premium (i.e. 8,7,6,5,4,3,2,1).

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The main risk associated with prepayment in HUD 232 financing is the prepayment penalty. HUD 232 loans usually have prepayment penalties, which are often negotiable, but usually have a two-year lock out period followed by a 8%- 1% step down premium (i.e. 8,7,6,5,4,3,2,1).

If a HUD 232 borrower wants to sell a property after a few only years and avoid paying any prepayment penalties, they can do so by having the buyer assume their HUD 232 loan. HUD 232 and HUD 232/223(f) loans are fully assumable, but the new borrower must be approved by HUD and the by the lender. A small loan assumption fee is also typically required.

HUD 232 loans usually have prepayment penalties, which are often negotiable, but usually have a two-year lock out period followed by a 8%- 1% step down premium (i.e. 8,7,6,5,4,3,2,1).

In the example above, if a borrower tried to pay off the loan in the fourth year, they would face a 7% prepayment penalty. In comparison, if they waited until the 6th year, the penalty would drop to 5%. After the 10th year (11th year and beyond), they would be able to pay off the loan without any additional fees.

Source: www.hud232.loan/hud-232-faqs/prepayment-penalty and www.hud232.loan/hud-232-glossary/prepayment

Prepayment in Relation to HUD 232 Financing: Prepayment is paying off a loan balance before maturity (the end of the loan term). HUD 232 loans usually have prepayment penalties, which are often negotiable, but usually have a two-year lock out period followed by a 8%- 1% step down premium (i.e. 8,7,6,5,4,3,2,1).

To learn more about FHA 232 loans, fill out the form below to speak to a HUD/FHA loan expert.

Get A Free HUD/FHA Multifamily Loan Quote!