[Petronski]

Where was the prepayment penalty mentioned? Did it apply longer than the period of fixed interest?

[Moonman62]

Where was the prepayment penalty mentioned? Did it apply longer than the period of fixed interest?

Yep, three years. They'll have to suck it up for a year.

[RockinRight]

The final poison pill--a $7,300 penalty if they chose to seek new financing during the first three years--discouraged the Philbrooks from refinancing once high rates kicked in. Not understanding the first three provisions, the couple were not fully appreciative of the dangers of this refinancing clause.

Yes, it was one year longer than the fixed period.

The interest rate is better in such scenarios, but as you see it's not always rosy to do that. Of course it depends-on an $80,000 loan with a 1% prepay penalty, that's $800-hardly enough to inhibit refinancing, but theirs was 3% on a much larger loan.