I have a mortgage with New Century and would really like to refinance (to get out of this interest only arm loan that i got stuck with,) but I have a HUGE prepaymant penalty if I refinance before April 2008. Now, that they are going bankrupt, I was wondering if they would let me refi with no penalty or if the penalty is voided some how.
Sorry, you will not be able to get out of the prepay on this one. When you closed on the loan you signed a contract saying that you would abide by the terms of the contract no matter what. Now with New Century Mortgage going under you will find that your loan will be sold off to the highest bidder. I know that Wells Fargo bought out most of Washington Mutual’s book of mortgages here a few months ago for reasons that closely resemble this. My advice to you is in 2008 when you can get out of the loan you are in, go to a bank that you know will be around for a while and not just some broker that can give you the best rate. Look at the name of the bank, if it is the first time you have heard of the bank, that is probably not a good sign. The big banks will not go under because they don’t do loans such as interest only. If you can, go for a loan that is fixed and does not charge Private Mortgage Insurance.
