POLL: Refi at 4.125% or 3.25%

[Sam Shin]

I got a couple of quotes from my mortgage broker on a refinance to go from my current non-VA ARM mortgage at 4.25% to a VA 30-yr conventional at:

4.125% interest with 2.83% credit or,

3.25% interest with 0.983 credit.

My broker recommends the first one saying that I can refi with IRRRL 6 months later to a lower rate provided the rates keep dropping. Plus, the total loan amount is lower because of higher credit. It saves me about $300/month whereas the 3.25% saves me $550/month but has a higher loan balance.

Which is the better option?

I'm leaning towards the 4.125% deal because it gives me some flexibility down the road to refi under IRRRL and my LTV for a HELOC would be better with it. Thoughts?

[Bob B.]

Will your broker guarantee you that rates are going to be lower in 6 months?