A prepayment penalty clause helps to protect a lender should the borrower refinance within a short time after obtaining a mortgage.

Name: A prepayment penalty clause helps to protect a lender should the borrower refinance within a short time after obtaining a mortgage.
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A prepayment penalty clause is designed to compensate the lender for the loss of interest income if the borrower pays off the loan early, such as through refinancing.

A Prepayment Penalty Clause Helps to Protect a Lender Should