Sorry I meant to also ask if these rate quotes/pts were competitive? Its from my credit union so i haven't checked anywhere else. Any good place to look on the internet? Thanks!
A credit union will typically have better rates, on average. I have a HELOC with PenFed - if you are military you automatically qualify, or anyone (like me) can qualify for a one-time $20 membership to the National Military Family Association. PenFed has great rates.
www.penfed.org Their current 30 year rate is 3.50% with zero points, but they tack on a 1% origination fee. Their other fees (appraisal, etc.) are very reasonable. So it sounds like your rate is fairly close, depending on what their good faith estimate is for all of the other miscellaneous charges that some for-profit brokers/banks will overwhelm you with at closing.
If you stick with your current loan quotes, I'd personally pick the 3.625%, since the 12 year pay-back is the nominal rate without inflation discounting, and I'd just pre-pay the loan down right off the bat with an extra $2,000 (if you do so, make sure you pay down the principal early, and they don't count it as paying your monthly payment early which may not amount to anything).
Also, check if they offer bi-weekly payments (paying your monthly payment in half, twice a month). The effect is small at first, but over 10-15 years, that 2 weeks early payment really snowballs into paying off your mortgage a year or two early as saving that extra little bit of interest (for 2 weeks) eventually adds up.
