Should I lock?

I have a 6.25% 40 year fixed and am looking to refinance my co-op where I plan to live for 8 more years.  Right now I am being offered 5.125% 30year fixed (60 day lock) to refinance $260,000.  I am refinancing my first and only property so I don't know whether I should lock or look to see if there is a way, maybe through a govenrment program to get a lower rate.  My credit score is only 660 so they add .125% to the lowest rate and I need to pay .375% of the loan in addition to all the other costs that he says will be about 2,500.  Does this sound right?

I am working directly with a mortgage broker at the bank I have the loan.  He is so not helpful...at all!!  I get 0 guidence but it is the best rate I see right now. I don't even know if I should float to see if I can get a better rate or lock now.

Sorry - I feel like I have 1,000 questions (not all of which is covered here)

If it's a co-op I don't think you'll be able to use FHA, so conventional is most likely your only option.

As far as floating or locking is concerned, besides the activity that is being reported daily on here, it's very difficult to forecast what will happen next week, or even tomorrow.  So if you haven't seen anything better and are happy with your payments then go ahead and lock it in.  I would probably hold off for a day or two since we're seeing such a big rally now, but not much longer.

Thanks Scott - I will keep an I on it for the next 2 days and then take your advice - It seems worth it for me to pay the 3,500 for closing to bring the rate down 1.125% and change to a 30 year.

Glad I could help!  Some other brokers might disagree with me, but the best advice I've seen on here and would forward on is to lock in when you feel comfortable with the payments.  Trust me, you'll sleep better at night not worrying about trying to get a slightly better rate.  Rates go up a lot faster then they go down.

I'll chime in here in agreement with Scott.  Since rates do tend to go up faster than they go down, "playing the market" usually leads to a situation where, while trying to save $25 or $50 a month, someone ends up with a payment $100 a month higher than it would have been had they locked. 

Thanks guys...I think I am going to lock if it is still at 5.125% at .375 points tomorrow.

After the market declines the past couple days, we hope you still have that rate available.