Refinancers Look at the Big Picture

Regarding “Before You Redo Your Loan, Do the Math” by Diane Wedner (Aug. 25):

For homeowners who already are more than halfway through their loan, there is a 10-year, fixed-rate, fully amortized loan under a FannieMae/Freddie Mac program. People refinance to save not on the “nominal” rate of interest per se, but to save on the aggregates of principal and interest over the remaining life of the debt obligation.

Also, many lenders will waive the pre-payment penalty to their borrowers if they are the holders of the existing loans. For example, Downey Savings Bank has on several occasions waived the pre-payment penalty for their existing borrowers who want to refinance.

Other big lenders who keep the loans in their portfolios do the same. Those lenders who insist on not waiving the penalty are usually those lenders who do not keep and service their own loans but have already sold them into the secondary market.

PETER SRISAVASDI

Encino

The writer is a mortgage consultant.