With all the hype and concern about big banks getting bigger and the demise of the secondary mortgage market, I started to believe it and decided to open a "construction-to-permanent" loan with Needham Bank over a year ago.  They sold me on stability ("We don't over-react to the daily flucuations of the market as rates move up or down") and flexibility ("We can adjust your loan without refinancing if rates drop significantly").  As a consumer always on the watch for better mortgage rates, I made a terrible mistake.  While mortgage rates have moved downward recently, I tried to jump at the opportunity to refinance my jumbo loan.  My community bank had published rates that seemed high so I reached out to folks I know in the mortgage business to see if I could improve on my current 10/1 ARM.  Within minutes, I had rates significantly better (1/2 pt better) than my current rate which would have saved my family $140,000+ over the term of the loan and reduced my monthly mortgage payment by $400.  As I went through the process of refinancing, my new lender informed me of a large pre-payment penalty associated with my current loan.  I was completely caught off guard because I assumed I had a 1 year pre-payment penalty which is most common, and somehow missed the fine print.  Needless to say, my community bank has refused to match the current rates available in the market and refused to release me from my pre-payment penalty.  So far, the stability and flexibility offered by the Bank does not seem to benefit anyone but the Bank itself.  While they can hold their rates steady for their customers, I would assume they have access to lower rates offered in the market and can refinance their own assets when rates decline.  So much for community banks serving the community... at least when it comes to mortgages.