Prepayment penalties increase the lender's mortgage yield and discount points decrease it.

Name: Prepayment penalties increase the lender's mortgage yield and discount points decrease it.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Prepayment penalties increase the lender's yield by compensating for the loss of future interest income when a loan is paid off early, while discount points are upfront fees paid to lower the interest rate, effectively increasing the lender's yield by receiving money upfront.

Prepayment Penalties Increase the Lender's Mortgage Yield and Discount Points