Which documents should a borrower review to confirm the presence of prepayment penalties in a loan?

To determine the presence of prepayment penalties in a loan, the borrower should review the Truth in Lending Disclosure and the promissory note.

The Truth in Lending Disclosure provides essential information about the loan, including terms and conditions that impact the borrower's financial obligations, such as the existence of prepayment penalties. This document is designed to help consumers understand the true cost of borrowing and ensure they have all pertinent financial details upfront.

The promissory note, on the other hand, is the legal document in which the borrower agrees to repay the loan amount, and it explicitly outlines terms such as interest rates, repayment schedule, and any penalties for prepayment. Thus, both documents serve critical roles in confirming the presence and implications of prepayment penalties.

While the Loan Estimate and closing disclosure also provide important information about the costs and terms of the loan, they are primarily focused on providing estimates and final details rather than explicitly confirming prepayment penalties. Other options like the credit report, loan application, homeowners insurance, and title insurance do not contain relevant information regarding loan penalties.