Prepayment
1. The payment of a debt obligation prior to its due date.
2. The excess payment over a scheduled debt repayment amount. Investopedia Says:
1. Examples include deferred expenses such as rent and early loan repayments.
2. Mortgage pass-through securities are prone to prepayment risk during a period of falling interest rates, as mortgage payments tend to accelerate. Related Terms:
Burnout
Conditional Prepayment Rate - CPR
Cross Calling
Mortgage
Mortgage Backed Security - MBS
Pass-Through Security
Prepaid Expense
Prepayment Risk
Public Securities Association Standard Prepayment Model - PSA
Relocation Mortgage - Relo |