Q: Last September I refinanced my condo to get a lower interest rate, from 9.25 percent to an 8.75 percent fixed rate, and some much-needed cash. Now my mortgage broker is offering me other re-fi deals that sound interesting. The first is an 8.625 percent fixed loan for 30 years; the other is a 6.25 percent adjustable that I can convert to a fixed, 20-year loan in one year. The deal carries no points, but the fees would total $2,000, the same amount I paid last year. I should also add that my current loan, for $185,000, runs for only five years; I must refinance it in 1996. Am I smart to grab the lower rates now or should I take my chances on the future?
A: This is a tough call. If you weren't obligated to refinance your loan anyway by 1995, there would be no question but that the deals you're being offered are terrible. But given your situation, someone could make a case that the additional $2,000 in fees you will be forced to pay for the second time in a year could be an acceptable price for the security and peace of mind you are apparently seeking.