Posted on: 09th Aug, 2010 10:08 am
It appears as though prepaying a mortgage would accomplish the same benefit as refinancing - namely a reduction in loan term and the "effective" mortgage rate (assuming there is no prepayment penalty), with the obvious advantage to prepaying of there not being any closing costs. What advantage would refinancing have over prepayment?
It may or may not accomplish the same thing but you have to run the numbers. If you can drop your rate without associated fees, you can still prepay and more will go to principal and the end result will be a faster payoff. It does not have to be one or the other, it can be both. Rates are so low that you may be able to do a no cost to a shorter term or at least a term equal to what you have remaining without fees. Speak with a loan officer in your state.