I just got off the phone with Patty at BB&T Mortgage, who walked through all the options I had with them with regards to my mortgage. She was extremely courteous and explained everything in great detail, great loan officer. The one big bit of advice I learned was that a loan modification isn’t what I thought it was. Loan modifications, at least by BB&T’s definition, are for scenarios in which you want to change the amortization of your loan and thus your payments, they don’t affect the interest rate on fixed loans. I was reading Jonathan’s post about his refinancing/rate reduction experience  and somehow managed to get it in my head that he did a loan modification, but he just got a rate reduction from his bank. (It would be nice if BB&T would just ask for $500 and drop the rate!)
We only talked about it briefly but loan modifications are for when you want to change one or more terms on the loan and can only lower your interest rate if you have an adjustable rate mortgage. There are cases where loan interest rates can be modified as well but those are usually for when you can’t make payments, they won’t just drop it just because you ask nicely (too bad). In my situation of having a fixed rate mortgage, a loan modification wouldn’t help me. The only thing I could do is pay a big chunk of principal and have the loan re-amortized.
So option one of a loan modification  is out but the rate I was quoted from BB&T for a refi is 4.875% APR on either a 30- or 20-year fixed with closing costs of around $3,100 to $3,200.
The game continues!