What is a Pre-payment penatly exactly?

What is a Pre-payment penatly exactly?

I'm reading Be a Real Estate Millionaire. The book is fantastic! I mean i didn't know one thing about how real estate works, heck i didn't even know how a loan works.

With this book though i have learned so much and look forward to finishing it. I have 2 questions:

1. On page 172 there is a thing called Pre-payment penalty. It says you get penalized 6 months to a year of interest if the loan is payed back early? How is that so? Sounds strange considering the one who gave out their loan is getting their money back.

2. If i were to go for the "flipping" strategy, what kind of loan am i suppose to take out?

Thank you!



"Whenever you find yourself on the side of the majority it is time to pause and reflect."
-Mark Twain