Yield Maintenance


DEFINITION of 'Yield Maintenance'

A prepayment premium that allows investors to attain the same yield as if the borrower made all scheduled mortgage payments until maturity.

BREAKING DOWN 'Yield Maintenance'

Yield maintenance premiums are designed to make investors indifferent to prepayment. Furthermore, It also makes refinancing unattractive and uneconomical to borrowers.

  1. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  2. Loan

    The act of giving money, property or other material goods to ...
  3. Yield

    The income return on an investment. This refers to the interest ...
  4. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
  5. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
  6. Interest

    The charge for the privilege of borrowing money, typically expressed ...
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  1. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  5. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
  6. Are FHA loans assumable?

    Loans insured by the Federal Housing Administration (FHA) on or after Dec. 15, 1989, are assumable by qualifying borrowers. ... Read Full Answer >>

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