Question:

Should I be paying down mortgage, if rates are higher than prime loan rates, or refinance?

Answer:

There is no right or wrong answer to this. Paying down mortgage with subprime terms may not be something that you want to do for a long time. You should seek to refinance if your mortgage rates are outright disastrous, and you have assumed a high prepayment penalty. This might be possible to qualify as predatory lending and you should seek consumer protection and legal help.

For example, the Consumer Federation of California (CFC) is a good starting place for you to report unfair mortgage terms, if you feel your loan is like this and you live in California.

Should you be paying down mortgage loan or refinance, if your mortgage rates are slightly higher?

Here the answer might be a straight yes. Mortgage interest is tax deductible on a large scale for most borrowers, so if you can afford paying down your home loan, go for it. Additionally, you may like to prepay your mortgage principal until your mortgage LTV (loan to value ratio) goes down to 80%. In that case, you'll be refinancing to lower rates and avoid paying costly PMI.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
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Common misspellings: mortage and morgage