I got a letter this week from a listener who just realized that the loan she took out last year has a prepayment penalty. She wondered if the 2-year prepayment penalty, which is $18,000 on a loan of $319,000, is legal.

Prepayment penalties have been a bone of contention within the mortgage industry for some time. While many states have outlawed them, federally-chartered lenders claim they follow federal laws that allow them.

Typically, lenders offer prepayment penalties to borrowers in exchange for a slightly lower interest rate on the loan. That may sound great . . . but I think you should take a pass.

The problem with prepayment penalties is that life can change on a dime. You might want – or need – to refinance your mortgage. Most prepayment penalties will kick in whether you refinance or sell, so if you get stuck, it could cost you thousands of dollars.

And you’ll never get a lender to waive one.

With practical, informative consumer advice, I’m Ilyce Glink, News-Talk 750 WSB