Trying to refinance with a prepayment penalty

January 16th, 2007 by Kenric

Today I called Countrywide, who holds the mortgage on one of my SLC townhomes.  The loan is an option ARM with a prepay penalty.  The prepay penalty period is over in 18 months.  I told them that I had a prepay penalty and would refinance with them if they would wave it.  The guy said that they do not wave prepay penalties from any loans.  He then said I could still possibly get a good deal.

 

Here was the great deal…  Currently, I owe $115k and am at 7.75% now.  My interest only payment is $750/mo. 

 

He said that he can get me a 30yr fixed for 6.25%.  However, I would still have to pay the prepay penalty and closing costs.  But, if I roll my prepay penalty ($6000) and all closing costs ($2500) into my new loan, I will end up with around the same payment of $750/month!  This payment would include principle and interest.  So I am actually saving money by paying down about $120 principle per month.  What a deal! 

 

It’s a tricky sales pitch. Car dealers use a similar tactic all the time.  It would probably work on people who only look at the monthly payment!

 

 

Posted in Finances | 3 Comments »
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  1. 3 Comments to “Trying to refinance with a prepayment penalty”

  2. Dammit Chloe… why can’t I refinance.

    By Jack Bauer on Jan 19, 2007

  3. I
    currently have a loan with Wachovia, it has a pre payment penalty that will expire on April-29-08. It is an adjustable mortgage tied to some saving index. I currently am paying 8.9%. My question is, is there any new legislation affecting pre payment penaltys, currently in place? I find lenders are not forth comming with information on this subject.

    By jamess murphy on Jan 27, 2008

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