therookie

Bought a two unit condo just over two years ago. Mortgage co played the bait and switch on me at closing, but due to several circumstances, I signed anyhow. Because I didn't have alot of cash onhand, I did an 80-20 loan, where the 80 was a 5 year fixed then moving to an ARM (this was the switch, as the 80 was supposed to be 30 fixed).

Well 26 months in and the market the way it is, I just went through the refi process, but also unbeknownst to me I have a three year prepayment penalty.

Not holding anyone to anything, but just looking for general feedback; would you bite the bullet on a $6,000 prepayment penalty in order to lock in what seems to be a decent rate now, or given the market instability, risk waiting another year until the prepayment timeframe has passed.

Any advice would be appreciated.

Go Sox.

Cubs2k

SO....it is not set to adjust for another 3ish years.

What is the basis for the adjustment....how will they calculate it?
What rate are you at now?
What are the details of the 20%, rate/term/etc?

You have something in your favor.....the prime rate is going down and if trends continue may bottom out in 12-18 months. Instead of refinancing with a Traditional Mortgage (closing costs, etc) you can get a Home Equity loan to replace the ARM. It is hard to tell what Mortgage rates will be in a year, but Home Equity loans are tied to the Prime Rate which is trending downward. They are much easier to get and can be done with ZERO cost to you.