We have a mortgage for a five year term that is almost up (it is a 25 year amortization). My husband and I disagree on what will happen when the five year term is up - I think if we pay off the mortgage on the day the term is up, we won’t be charged any early-payout penalty (the penalty is three months interest). My husband thinks that if we pay out the mortgage at any time before the 25 year amortization is up, we’ll be penalized the three month interest penalty.
We’re thinking about selling our house here and moving to a much cheaper house, so we’re in a position where we might actually be able to pay off the mortgage and have no mortgage in the new house (or a very small mortgage). If we can pay off the mortgage in six months with no penalty, that would (of course) be our preference.
Does anyone know what happens in this situation?