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Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Prepayment Rider

Function: noun

The Prepayment Rider discusses the borrower's right to prepay their loan. Sometimes there are penalties for prepaying a loan during the life of the loan, or during the first several years of the loan. Some borrowers like to pay a little bit more than the monthly payments to pay off their loan sooner. Other borrowers refinance a few years after taking out the loan and pay the whole loan in full using the proceeds from the new loan. Its important to know if there is a prepayment penalty so you can decide if you want options for refinancing or prepaying several years in the future.