An owner’s mortgage includes a clause requiring a prepayment penalty. Three percent of any outstanding loan principal would be charged by the lender if hte owner paid off the principal before the scheduled time. Payments were $296.88, due on the 1st of each month, and included both principal and interest in arrears at 8% per annum.
After the owner’s July 1 payment, her loan balance was $8,946.23. On Aug 1, after handling her lender the check for her Aug 1 payment, the owner paid off the entire remaining loan balance. What is the approximate prepayment penalty?
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