pay off the prepayment penalty to refinance or wait

Guest 0.10 Dollars($)

I am currently on an ARM and want to refinance. Will it be wise to go ahead with it and pay the prepayment or shall I wait for the rates to come down?

jameshogg · Posted: Thu Jan 05, 2006 2:01 pm Post subject:

Hi Sunglow,

It is a bit tough to suggest in the existing market on whether you should refinance and pay the prepayment penalty to lower your interest or should wait for the rate to come down.

Few analysis although, may help in predicting some thing out of it. You need to look at how long you are planning to stay in the house as if you are leaving it within a short period of time, and then there is no need to take this new expense.

Also if the prepayment penalty is going to drop off in a year or two, then I think it's better to wait. After that you go for the refinance so that you need to pay only the closing cost as the new expense.

James

Guest 0.10 Dollars($)

Hi Sunglow,

You can go for a refinance at any time if don't have the pre-payment clause. Check whether your monthly payments get lowered enough to cover up your closing cost.

chen

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