The ability to refinance a mortgage with no prepayment penalty gives the borrower a long-term put option on interest rates.

Name: The ability to refinance a mortgage with no prepayment penalty gives the borrower a long-term put option on interest rates.
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Refinancing with no prepayment penalty allows the borrower to take advantage of lower interest rates in the future, effectively giving them a put option on interest rates.

The Ability to Refinance a Mortgage with No Prepayment Penalty