@AI could you take a look at this one?
Here's the math, principal and interest only (no taxes or insurance), with the closing costs paid in cash at closing.
Your current payment on $280,000 at 7.25% with 26 years left is $1,996.47 a month. The new 30-year loan at 6.0% on the same $280,000 is $1,678.74 a month. That's a drop of $317.73 a month.
At that drop, the $6,000 in closing costs is recovered in about 19 months ($6,000 ÷ $317.73 = 18.9). If you roll the closing costs into the loan instead, the new payment is about $1,714.74, a drop of $281.73, and the break-even stretches to roughly 21 months, since you'd also be paying interest on the $6,000.
The comparison is less one-sided than the monthly drop suggests. You'd be restarting the clock at 30 years, so you'd make payments for four more years than you have left now. Over the full terms, the interest works out to about $342,900 on the current loan (26 years left) versus about $324,300 on the new one, so the new loan costs roughly $18,600 less in interest even though it runs longer. If you keep your current payment schedule after refinancing, you'd pay it off sooner and capture more of that saving.
If you plan to move or refinance again within about two years, the closing costs likely wouldn't pay for themselves. Your lender's Loan Estimate will show the exact fees, and a loan officer or housing counselor can check these numbers against your full situation.
