penalty for breaking a 5 year closed variable rate because I sold my house.

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I am in canada. i have about 3 years left on a 5 year closed mortgage with a variable rate that is the bank's prime minus 0.8%, and i can convert to a locked in rate with no penalties. their prime is 4.75, and the posted fixed rate is 6.09 so my rate would go up by 2.14%. i may be able to get slightly better than the posted rate, but not by much. how much do you think mortgage rates are going to go up? should i lock in now or gamble on the variable rate? please explain your reasoning. the fixed rate is 5.79% if i lock in for 5 years. i am not planning on selling in the next 2 years. (i suspect the market is on the verge of a downward trend, or even collapse, so it's sell now or hang on for the ride!)

I don't live in Canada, but by staying in the variable rate you are putting a time limit on your gamble. You are gambling that in 3 years the interest rates will go down...which is possible but not likely to see a signifigant change. The current status of the economy makes me believe that the interest rates are at there lowest, or very near. This decision will be based on what your future plans are. If you are thinking that you will sell the house within the next three years, then keep the variable, sell the house, and move on. But, if you are thinking that you will live in this house for many more years, then you are better off to get the fixed rate. There is less of a gamble with a fixed rate, and 6 points is very very good. Lets hope for the best and the economy makes an upward turn, it is likely that the rates will not hit these lows for a very long time. And if that happens, you will see a rate that is in the 7-7.5 range in that three years for a fixed rate. So, you will save money in the long run if you plan on living there for a long time, lose money if you plan on selling in the short term.

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Firstly, i live in ontario canada, so this deals with the canadian banking system. my husband and i currently have a line of credit worth $25,000 at 4.55% interest. we have a closed mortgage worth $165,000 with a term of 5 years @ 5.3% interest and an ammortization period of 25 years (we are doing accelerated weekly payments, so our mortgage can be paid off sooner). our mortgage does not come up for renewal until june 2011. it is forecasted that interest rates are going to start climbing again, likely beginning this summer...they won't climb quickly, but will start to again. at this time, we are aggressively paying down our line of credit and we expect to have it down to $10,000 by the time our mortgage is up for renewal next year. we were talking to an account manager last night, and what they recommended was that we take our line of credit, put it on our mortgage, switch to a variable rate mortgage for 5 years (so our rate would go down to prime, which is currently at 2.25%), and take the additional penalty of about $5,000 for ending the term early on the closed mortgage. the way they explained it to us was that our mortgage payments would go up slightly, but we'd be paying off so much more interest, so the penalty would be worth it to take. if we took a closed variable rate mortgage for 5 years, we'd pay whatever bank of canada prime was. if we took an open variable rate, we'd pay prime + .70%, but could easily get out of the term if we wanted to with no penalty. we're not sure what to do. is it worth it to consolodate and put our line of credit on our mortgage + take the penalty? or should we just continue chisling away at the line of credit, wait until our mortgage is up for renewal and then take a variable rate mortgage (assuming prime is still pretty low). i hope i explained it all okay, thanks for the advice in advance.

If I understand correctly, you're about 4 years into a 30 year mortgage. Several points come to mind. The first is that the only way to make a good judgment is to take ALL the costs with switching mortgages, ie the penalty for closing the first mortgage as well as all the costs for the new mortgage, which will be in the range of 3-5K, make some guesses as far as interest rates and see how the costs compare. You don't say what your current mortgage could go to, ie +2% every 5 years, etc; this will have a bearing. If you do make a switch, why aren't you considering a 15 yr mortgage? Your payments go up by 15-20%, but you pay off the mortgage in half the time. In the same vein, while paying of your line of credit is good, your mortgage is at a higher rate, I would put most of the extra money toward it. Print out an amortization schedule and look at where you are on the mortgage and see how many months you can knock off the mortgage by prepaying on it. (Look at the principal column, so for every $ extra, it makes a big difference as at that point in your mortgage, for every $1K regular payment, $100-150 is going to principal. So if you dump in $1K extra, you just shortened the mortgage by 8-10 months.

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I'm 18. i have no credit. i'm looking to build my credit by paying my monthly balance on time. i've been looking for a low fixed apr but it seems nearly impossible. i found a low variable apr. what do you think. here are the details... annual percentage rates for purchases and balance transfers7.25% variable1 other apr'scash advance: 11.25% convenience check: 11.25% penalty rate: 16.25%2 variable rate informationthe following aprs may vary monthly based on the prime rate.3 purchase and balance transfer apr equals prime rate plus 4.00% cash advance and convenience check apr equals prime rate plus 8.00% penalty rate equals prime rate plus 13.00% grace period for re-payment of the balance for purchases25 days from the cycle closing date method of computing the balance used in calculating finance charges for purchasesaverage daily balance method (including new purchases) annual membership feenone minimum finance charge$0.50 transaction fee for purchasesnone transaction fee for cash advances3.00% of the amount, but not less than $4.00 nor more than $50.00 transaction fee for convenience checks3.00% of the amount, but not less than $4.00 nor more than $50.00 transaction fee for balance transfersnone late payment fee$29.00 over-the-credit-limit fee$29.00 the terms of your account, including aprs, are subject to change. any such change will be made in accordance with the card membership rules. if twice during any six month period prior to july 27, 2009, my payment is not received or received late, the daily periodic rate will be the prime rate plus 13.00% divided by the number of days in the year. this rate will be effective immediately following the statement cycle in which the second payment was late or not received. the account will again become eligible for the lower periodic rate as set forth above, after i have made the minimum payment by the payment due date for six consecutive statement cycles. your account has a variable rate indexed on the prime rate. your rate will increase if the prime rate increases. changes in aprs (increases or decreases) due to changes in the prime rate will be effective on the first day of your next statement cycle beginning at least two days after the change in the prime rate. the prime rate is the prime rate published in the money rates column of the wall street journal in effect for the second business day prior to the beginning of each statement cycle. variable rate aprs are based upon the 3.25% prime rate in effect on july 27, 2009. the information about the costs of the card(s) is accurate as of july, 2009. this information may have changed after that date.

Deciding which credit card to use is sort of like a virgin on a ship captured by pirates trying to decide which pirate would be best to rape her. No matter what you choose you loose. Best case is to pick a card for the needs you have. Low interest rates or a determining factor for a person carrying a balance - The card listed is ok but may change. The truth is that you simply need to pay off any balance ASAP and then it doesn't matter. To carry credit card balances is one of the poorest money choices a person can make. In this sense and this sense only the higher rate tends to discourage carrying balances.

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So i kind of want to get a credit card with american express and i was wondering if these terms are good for someone whos never had a credit card. ive already read through them and i think they sound okay but then again im not really experienced in the terms of credit cards thats why i would love some elses opinion on the matter blue cash from american express important information regarding rates, fee, and other cost information interest rates and interest charges annual percentage rate (apr) for purchases 0.0% introductory apr for the first 6 months. after that, your apr will be 17.24, 19.24 or 21.24% based on your creditworthiness as determined at the time of account opening. this apr will vary with the market based on the prime rate. apr for balance transfers 17.24, 19.24 or 21.24% introductory apr on balance transfers requested within 30 days of account opening. after that, your apr for those transactions and any other balance transfer requests, if we accept them, will be 17.24, 19.24 or 21.24% based on your creditworthiness. apr for cash advances 25.24% this apr will vary with the market based on the prime rate. penalty apr and when it applies 27.24% this apr will vary with the market based on the prime rate. this apr will apply to your account if you: 1) make one or more late payments; or 2) make a payment that is returnedhow long will the penalty apr apply? if the penalty apr is applied for any of these reasons, it will apply for at least 12 billing periods in a row,and will continue to apply until after you have made timely payments, with no returned payments, for 12 billing periods in a row. paying interest your due date is at least 25 days after the close of each billing period. we will not charge you interest on purchases if you pay your entire balance by the due date each month. we will begin charging interest on cash advances and balance transfers on the transaction date. for credit card tips from the federal reserve board to learn more about factors to consider when applying for or using a credit card, visit the website of the federal reserve board at http://www.federalreserve.gov/credi tcard. fees annual membership fee $0 transaction fees balance transfer cash advance foreign transaction either $5 or 3% of the amount of each transfer, whichever is greater. either $5 or 3% of the amount of each cash advance, whichever is greater. 2.7% of each transaction after conversion to us dollars. penalty fees late payment returned payment $19 if balance is less than $250; $39 if balance is $250 or more $38 how we will calculate your balance: we use a method called "average daily balance (including new purchases)." loss of introductory apr: we may end any introductory apr and apply the penalty apr if you make a late payment. variable aprs for each billing period are based on the prime rate published in the wall street journal 2 days before the closing date of the billing period. the wall street journal may not publish the prime rate on that day. if it does not, we will use the prime rate from the previous day it was published. if the prime rate increases, variable aprs will increase. in that case, you may pay more interest and have a higher minimum payment due. when the prime rate changes, the resulting changes to variable aprs take effect as of the first day of the billing period. variable aprs are accurate as of 07/15/10. terms and conditions by submitting this application, you are requesting us to open an account in your name and to issue card(s) as you direct. only qualified individuals 18 or over may apply for an account. this offer is available to us residents, excluding puerto rico and the us virgin islands. you promise that the information you provide on this application is accurate. you authorize us to verify this information and to obtain reports from consumer reporting agencies. you authorize us and our affiliates and subsidiaries to share information we have about you at any time for marketing and administrative purposes as permitted by law. upon request, we will tell you if we have received a consumer report and the name and address of the agency that provided it. when you use your account (or sign or keep the card), you agree to the terms of the cardmember agreement that will be provided to you.your cardmember agreement includes an arbitration provision, which impacts your opportunity to have claims related to the account heard in court or resolved by a jury, and to participate in a class action or similar proceeding. you are responsible for all use of your account, including use of your account by additional cardmembers and anyone you or they allow to use your account. we may change the terms of, or add new terms to, the cardmember agreement at any time, subject to applicable law. we may apply any changed or new terms to any existing and future balances on your account, subject to applicable law. additional cards: yo

I wouldn't worry too much about these terms as you most likely will not qualify for an AmEx card as your first card. If you are under 21, you have to prove income now or have a cosigner to get a credit card. American Express is one of the more difficult cards to qualify for.

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My husband and i have been approved for 100% financing from a local bank. when i asked the loan officer what kind of loan it was he said inital fixed then variable and i said oh an arm and he's like no it's kind of like a balloon. no prepay penalty, 20yr terms and no rate caps of any kind. my husband's uncle has large business w/this bank & placed a cd of 20% for collateral so we don't need pmi either.it's fixed for 3 yrs/then variable and our rate quote was 7.129fxd. our scores are 640 and 660 w/a recent 50pt hike due to paying off some cards. if the run it again it'll be 660/690. there are awesome factors like only paying hzd ins 25% upfront and min. closing costs but arm's don't have such a good rep. now and with no rate cap? i've heard arm's inital fixd rts are often super low to lure u and it gets worse later...but we have a high rate initially & then who knows. our gfe said there migh tbe a prepay penalty and are we gonna be able to refi in 2 yrs? hubbys mad i'm questngit oh and it's not a balloon in any way even though he said it was...we pay for 20 years and on year 20 it's done. i am just thinking maybe our interest rate is somewhat high b/c of some agreement my hub's uncle might have w/interest on his cd. the banker said that we're also an inhouse loan too if that makes a difference. thanks guys oh and he's the vp of a smaller bank that has about 8 regional offices in this state..not a broker ...which is why i'm thinking maybe paying a little bit more interest might be worth it to avoid pmi..my only concern is that if we have to refinance in 3 years...will it be a problem..it's a reputable bank arond here..... shoot..one more think lol. my husband is furious w/me because i'm questioning all of these conditions and clauses. i guess he thinks i'm not greatful of his uncle for giving us collateral but i'm just trying to avoid what many others recently couldn't..i don't want to loose my house b/c of an arm. he told me this morning that i needed to leave it alone b/c i was "reading too much into this".......i thought that was something that a wife should be admired for...not scolded. geeze.

Bad terms, bad rate, bad deal! While everyone likes to tell you to go to your local bank, your neighborhood bank does not do the volume of mortgages that the big companies do. There is no way they can compete. I'm sure I'll get thumbs down as I normally do, but the bottom line is that you need to get a broker, and you need to have them find you the program that fits your situation. Your local bank may have a handfull of options at best. You will save time and money by getting a broker. Get a licensed, reputable one and you will be fine. Keep shopping.

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I have declared bankruptcy 3 years ago. i bought a house after the fact with a variable interest rate. i am now wanting to refinance. i have an offer for a 5.25% fixed 15 year refinance. the payments of this new loan is about $50 less a month than what i'm paying on a 30 year note. i know refinancing with this rate and term is a no brainer. my question is, in order for me to get this loan, the lender wants 2 points paid upfront with my closing fees. total closing fees is going to be about $4,500 with the points, and escrowed fees of property taxes and insurance. it's about $1600 for points alone. is this still a good deal considering my bankruptcy and paying the same as a 30 year note but now on a 15 year fixed? i also have to pay about $1500 penalty payment to my current lender for refinancing before my 3 year mark. what are your thoughts? in all it will cost about $6000 to get this loan....but it is fixed, payment is $50 less a month, and it's only 15 years instead of 30? the new loan does not have a prepayment penalty. i plan on staying in this house for several years so unless interest rates drop to about 2% it's not getting refinanced again. i also don't plan on paying "above" the monthly payments. it's already on a 15 year note and will be paid off 20 years before i retire. i've done my homework and learned alot after getting raped the first time. i'm just curious as to the 2 points i have to pay. i'm wondering if it's "common practice" when you declare bankruptcy so recent.

I agree. If it benefits you this much go for it. If it was a 30 yr fixed I would think twice but you are saving 9000 over the course of 15 years. Not to mention saving an extra 15 years of payments. My guess is that your payment now is about 800 per month so you would be saving around 144k over 30 years.

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I am at a bank. scotia. and they have me in a 3.7 for 3 years. another bank is offering me 3.79 for 5 years. the difference id be saving is close to 12,000. to transfer i have to pay the scotia bank 1400 penatly. and then my lawyer fees etc of 700. my question. is it worth me paying to transfer? or should i stay with scotia stick with the 3 years and at the end hope that the variable or the fixed will not be higher than 4%.?? to transfer banks you have to pay a lawyer to witness signatures. theirs the apraisal of the house... i would be paying an extra 15 dollars on my mortgage but i would be getting another extra 2 years.

Based on the interest rate percentages you mentioned, your new bank is going to charge you a higher interest rate than you are currently paying (3.79 VS 3.70). That being the case, I am confused that you would be saving "close to 12,000" - the numbers just don't add up. When determining whether or not to refinance, your best measurement is to divide the total costs of the refinance (penalty fee, attorney fee, closing costs etc) by the amount of money you would be saving each month on the payments. For instance, if the total cost to refinance was $2,100 and you monthly savings on the payment would be $100, you would divide the $2,100 by the $100 ($2100/$100=21) The "21" being the number of months it would take you to break even on the costs of doing the refinance. Another potential problem is that you are looking at a 3 year term versus a 5 year term. While the 5 year term will bring your monthly payments down, it will ultimately cost you more money in interest than your current loan (due to the 5 year term at the higher interest rate). I would recommend that you research all of the costs of doing the transfer, then do the math mentioned above to see what your break-even would be. If the break-even is less than 2 or 3 years, AND you plan on being in the home longer than that, AND you do not ultimately lengthen the entire term of the loan, it would probably make sense to do the refi. Good luck!