Question

Which statement BEST describes the prepayment clause in a mortgage?

1) It stipulates the prorated amounts of taxes and insurance that must be included in the monthly payment
2) It establishes the lender's position with regard to payments made before any liens are satisfied
3) It allows the lender to accelerate the date of the mortgage under specific terms and conditions
4) It allows the borrower to pay off the mortgage early under specific terms and conditions

Answer 1

The prepayment clause in a mortgage allows the borrower to pay off the mortgage early under specific terms and conditions.

Step-by-step explanation:

The statement that best describes the prepayment clause in a mortgage is option 4) It allows the borrower to pay off the mortgage early under specific terms and conditions.