As most of you probably know, the Fed's announcement last week had the effect of further lowering mortgage rates. We had been trying to do a no-cost refi at 3% for a 15 year fixed back in August, but our appraisal came back low, and we would have had to pay PMI, so we decided not to do it. I called up my bank today to see what they were offering now in terms of a loan modification (similar to a re-fi in some ways, but different in others - most notably, there's no appraisal, very minimal paperwork, and the clock on the loan does not reset - you just pay a 1.25% fee based on the amount of principal remaining, and you get the lower interest rate). Currently we have a balance of $210k remaining on our loan, and it is a 15-year fixed at 3.625%. Our last re-fi was almost 2 years ago, and at our current rate of payment, we'd have it paid off in about 11 more years. This loan modification would get us down to 2.875%, at a cost of about $2600, and reduce our interest paid by around $110 the first month, or $15k over the life of the loan if we stuck to the required payments. I am wondering whether I should wait to see if rates drop further, or just go for it now? I think that rates could drop to 2.5% realistically at some point, but it is of course worth more to re-fi earlier on in the life of a loan. What would you do?