Pre-payment penalties are added to certain loan programs in order to price them more aggressively. The lenders are basically saying: we'll give you a great deal, but you need to stay with us long enough for us to make some money on your loan. If you think you may move or refinance within the time period of the penalty, choose another loan program. Also, look at the penalty to be charged. Some are just 2 points (2% of the loan amount), some are 6 months worth of interest. Look before you leap. The lenders charging a 6-month prepayment penalty may be giving themselves a better deal than yours, and they want to lock you in there.