Pre Payment Penalties

Try to avoid them if possible. They're in place from the lenders so that they make sure they make their interest return on their investment by loaning you money. Now, if you absolutely know your new mortgage isn't going to be a candidate for refinancing in the next Three years, then it may be OK to take a prepayment penalty to lower your rate. Likewise, if you're getting a Home Equity Line of Credit (HELOC / 2nd Mortgage), then lenders have started "HIDING" the prepayment penalty in Semantics: They call it an Early Termination Fee. Basically the same exact thing as a pre-payment penalty... they just use ETF to get around the consumer's psychological barriers as well as disclosures in Federal form. Sometimes, prepayment penalties are "just the cost of doing business." Final note: Most Prepayment Penalties are TAX DEDUCTIBLE in the tax year that you PAY the Penalty. Call me if you need more information on prepayment penalties you might have on your existing mortgages or future loans. Pat Townsley, Mortgage Guru. 415-485-1776. www.PTRE.net