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Would you give up the right to refinance for five years in return for a break on your mortgage interest rate? Countrywide Mort-gage, the nation's largest mortgage banker, is offering a variation on this deal.

Here's how the offer works:You can get a quarter point off the market rate for a 30-year fixed mortgage. And you can sell the house with no penalty. But if you refinance within the first five years of the mortgage, there is a stiff prepayment penalty. The penalty also applies if you prepay more than 20 percent of your mortgage in the first five years.

A spokeswoman for Countrywide said that the current rate (June 5) on a 30-year fixed rate mortgage at the company is 8 5/8 with a half point. If you take the prepayment option, the rate is reduced to 8 3/8 with a half point.

At the lower interest rate, you would save $21.26 a month on a mortgage of $120,000. Over one year, the savings would add up to $255 and over five years $1,275.

But you would lose much more than that if you decided to refinance during the first five years of the mortgage - the penalty would be six months interest on 80 percent of the original loan balance. That would be about $4,180 on a $120,000 mortgage.

If you decide to take the reduced rate option, you will be betting that mortgage interest rates will not fall enough in the next five years to make refinancing worthwhile.

Consider this: If rates on 30-year mortgages fall to 7 percent, the monthly cost on a $120,000 loan would be a tempting $798, down by $114 a month from the $912 you would be paying at 8 3/8 percent. In just one year with that lower rate, you would save $1,368. Refinancing would almost certainly be worthwhile.

Keith Gumbinger of HSH Associates, a mortgage information company, said it makes the most sense to get a mortgage with a prepayment penalty when interest rates are low. For example, if the 30-year fixed rate were 7 percent now and you were offered a prepayment option at a rate of 6.75 percent, you would be pretty safe in assuming that rates would not drop enough in the next five years to make refinancing attractive.

Rates have been down to 7 percent several times in recent years and there's no reason to think that couldn't happen again. So, if you're thinking about a prepayment penalty, this might not be the best time to take that on.

"The industry wants prepayment penalties very badly," Gumbinger says. "Consumers are not clamoring for them."

A spokeswoman for Countrywide disagrees. She says that "the response has been phenomenal, really tremendous" to her firm's lower-rate offer.

A number of other lenders also offer lures to convince customers to take a prepayment penalty. The reason is that the investors who buy mortgages are tired of all the people who refinance and leave the investors with less in interest income than anticipated.

Many states will not allow prepayment penalties. As a result, Countrywide is offering its reduced option payment in only 31 states:

Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maine, Montana, North Carolina, Nebraska, New Hampshire, Nevada, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington and Wyoming.

If you're interested in these loans, you can get more information and an update on interest rates by calling Countrywide toll-free at 800-570-9888.