PREPAYMENT RETOTD: Episode 00048

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PREPAYMENT

Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized. Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner’s decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

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