Should we refinance our mortgage?

When rates drop well below what you signed for, breaking the mortgage to grab the lower number is tempting, but the penalty often eats the savings. This piece works through that exact call for a couple locked into a higher fixed rate for a few more years. The barrier is the cost of getting out: a sizeable prepayment penalty, usually figured as the greater of three months' interest or an interest rate differential, plus smaller costs like reappraisal and re-qualifying under today's rules. Run the comparison and the balance a few years out can land close to where it would have been anyway, which takes the shine off the move. The reasoning lands on sitting tight until renewal, when rates can be reassessed without a penalty. It's useful for any homeowner weighing an early exit against simply waiting out the term.