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Interesting! > If you had taken out a 30-year fixed rate mortgage for $100k when rates were around 1%, you can now prepay it for just $70k, i.e., at around a 3
by loeg 3y ago
Interesting!
> If you had taken out a 30-year fixed rate mortgage for $100k when rates were around 1%, you can now prepay it for just $70k, i.e., at around a 30% discount.
Maybe this is a dumb question, but could you finance the prepayment with a new mortgage?
- BlandDuck 3y agoAbsolutely, that is a common way to refinance mortgages.
- kioleanu 3y agoYes, but factor interest rates in. Refinancing 70k at 5% is worse than having 100k at 1%. So although it may be doable, I don’t imagine seeing this in practice
- loeg 3y agoNo -- if the discounted prepayment is the market price, they should be more or less exactly the same. That's why you get the cash out (100k - 70k => 30k, for example).