trader_4 writes:
On Tuesday, March 2, 2021 at 12:44:39 AM UTC-5, wrote:
On Mon, 1 Mar 2021 23:07:18 -0500, Ralph Mowery
wrote:

In article ,
says...

On the other hand, those who got variable rates in 1992 when they
were starting at 9.25%, made out quite well as they quickly dropped
to 7 and later 5%.



When the rates drop one can usually negociate for the lower rates even
on fixed rates, or go to another bank (lender).
You'd need to buy your way out of the mortgage - the penalty
is usually the interest they are losing plus a fee for the
trouble.
John T.

Is that how it works in Canada? Not here in the US. I've never seen a mortgage
with a pre-payment penalty at all and I would bet that it's probably illegal in many
states. I've refinanced many times with no penalty. The only costs are whatever
it takes to get the new mortgage, eg application fee, appraisal fee, misc fee, etc.

The biggest cost is that you're resetting your amortization clock. So you
often end up paying more in interest over the life of the loan, even tho the rate is lower.

Far better to just double your principle on each (or even every other) house payment.

You'll save much more over the long run.