Is this the US? There are laws that protect penalty free prepayments on student loans, federal or private. Depending on the rates it may or may not be better to invest or have as a rainy day fund, depending on the overall state of finances. But you have a legal right to prepayment and it would have to be a pretty backwater lender not to be aware of this. That said, the system could be clunky.
What bank or federal payment processor?
Those were the median in 2023:
Total loan costs, which include origination fees and discount points, also increased between 2022 and 2023, with faster increases for Hispanic white and Black borrowers. The median total loan costs for home purchase loans in 2023 was $6,684, up by 12.2 percent from $5,954 in 2022. The median total loan costs for refinance loans reached $7,329 in 2023, compared to $4,979 in 2022–a 47.2 percent increase. Notably, Hispanic white and Black borrowers experienced faster increases in the median total loan costs for home purchase loans in 2023 compared to 2022 than Asian and non-Hispanic white borrowers.
Like any median, it’s the 50/50 midpoint, so some payed less others more, but it is usually in the range of 3-6% of principal.
What you’re saying is mostly correct but the conclusion that a 0.25% rate reduction could pay off in less than a year is overly optimistic for most any borrower in the US mortgage market.
Using their example:
As interest rates fall, millions of borrowers may be able to refinance and get more affordable payments. As interest rates eased down to 6.5%, about 2.5 million borrowers could already refinance and save at least 75 basis points (0.75%) on their interest rate, according to data from ICE Mortgage Technology. A reduction in rate from 7.25% to 6.5% would result in a $200 monthly savings on a $400,000 loan with a similar term. If interest rates fall to 5.5%, more than 7 million borrowers can potentially refinance, and over 5 million of these refi candidates got their mortgages in the past three years.
So a .75% reduction saves $200 a month on their example mortgage, meaning that to make a refinance break even in less than a year would require origination and other fees to be less that 12*$200 = $2,400, and that’s with 3x greater reduction in rate than your statement.
Given that the 2023 median refinance fees were around $7,000, often ranging from 3%-6% of the principal, you would need a more substantial rate reduction to break even on 0.25 in one year, and in that range would likely have a 8-10 year break even.
Which is fine if you strongly expect to stay in the house for at least that long.
Note: while pre-approval letters didn’t generally obligate you to use that lender, the general statement that a contract isn’t a contract until money changes hands isn’t correct as consideration under a contract can take many forms, so talk to a lawyer about your specific situation.
The rest of the advice is good. Shop around for mortgages, look at mortgage brokers and credit unions, keep your old payment to accelerate payment (though it might be better to invest the difference depending on rates), and to run the numbers for your actual mortgage as the refinance market changes is all sound.
Good on him for giving it an honest go. I do think that for fresh installs, laptops feel more likely to run into issues unless you are buying very mainstream hardware or using the OEM image with the driver bundles in the installer.
Also, using edge, native tools, and no cleanup or debloat is just painful. But I suppose the point is to highlight what you get out of the box, and if you used Titus Utils to dump all the quality of life things on the system you aren’t really assessing the stock os.
https://mohela.studentaid.gov/DL/resourceCenter/HowPaymentsAreApplied.aspx
They definitely allow prepayments. Have you used the online portal?