LD posted: " ... I haven't seen a prepayment penalty in probably a decade." Recently, I've been doing some Discover construction loans. They're actually equity loans. These have all been for borrowers doing some construction on an existing primary residence. They all had the same commonality. Note says no prepay penalty; yet, document at end of package says if paid off within first three years, there's a penalty of up to $500 to cover the closing costs paid by lender.
From the website:
"Discover Home Loans pays all closing costs incurred during the loan process, so that you don’t have to bring any cash to your loan closing.
In the event that you decide to pay off your loan balance in full within 36 months after your loan closes, you will be required to reimburse Discover for some of the closing costs that we are paying on your behalf, not to exceed $500.00.
Reimbursable closing costs will include all title fees, recording fees, and mortgage/transfer taxes. If you reside in Connecticut, Minnesota, New York, North Carolina, Oklahoma, or Texas you are not required to reimburse the closing costs."
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