Does it make sense to refinance with this offer?

I would't do it. I would invest the 32k in something conservative.

So much paper work.

You're not doing enough arithmetic. You are not going to stay there 30 years and pay off the entire loan.

Generate the two amortization tables and take a look at what happens over the next 7 years, or whenever you think you're likely to move. Because you WILL move, unless you are very very unusual. How much do you save then?

The old rule was 2% difference in interest rate made the expense of refi worthwhile.

This is like car leasing, the numbers are very confusing. But the monthly payment ain't the whole story by a long shot.

With a 7 year time horizon you should invest in a stock index fund. Figure out the growth of that nest egg money over 7 years at say 6% a year or so, as an opportunity cost if you refi.

Also, as an additional opportunity cost, you've got $ tied up in real estate instead of in liquid assets. How big is your emergency reserve? If this 32K is your reserve, then it's a no brainer in my book--don't refi.

You can probably get better rate and terms elsewhere Who is the lender

First off, your math is wrong. Since you are already 30 months into your mortgage, unless you had an IO, your monthly payment is wrong, as is the entire amortization table. You need to do the calculation on your original loan balance. Besides the wrong math, you are also 30 months into your loan, so ~$45k of that total interest amount is already paid and gone and you would $310k of interest left to pay on your original mortgage. If you refinance, not only do you start from square one regarding the term left in your loan but you also start over and pay a higher percentage of interest/less principal every month.

I agree with Flutistic and Streetsmart. You won't be there 30 yrs to reap the savings and your equity can be better invested than in paying down your loan to save 25 bps a year.

why didn't you buy apple at $390 when it was earning 3% with the PV difference of interest rate swing?

When apple hits $780 in the next year, ya could've had a V8?

Oh I get it... .the PV comes from a bank, funded by tax payers and theres' a put option if you get it wrong....

Never mind.. .GO TEAM RE!

Millions of these minions making these micro economic decisions... and ppl wonder why there are $12K/psf condos.... FLMAOZzzzzzzzz....

Assuming the numbers are accurate (but brought into question by E24, and I couldn't replicate the current payment with guesses on the original loan size), you are paying $32,000 to save $218 a month or $2000 a year once you discount the monthly savings by 20% for the interest deduction you are losing. That's a return of 6.5%. There are worse things.

It's not worth it unless there is at least 1 percent difference in rates.

How about on a billion dollars? Howz about on a $150b? Nah let's not refinance honey. Go back to bed.

Instead of the credit, ask the lender to pay a point for you. Would bring the rate to ~4% and save you another $109 a month. Brings your return (using crescent's math) to 9.8%. Not too shabby.

Another option is to ask the lender to give you the conforming rate at the current loan balance. You already have significant equity and it is an insignificant amount to them. Should be an easy thing for the bank to do.

Ethana, I do not see much value in this deal you're being offered. In reality, you're only really saving roughly $1,100 annually in interest. In return, you'll be required to do quite a bit of paperwork over the next 45-60 days and remove $32,000 from your personal liquidity.

Your closing costs on this refi would be roughly $5,000-7,000 so you need to confirm that they are indeed paying for ALL of your closing costs, or just the bank's portion.

I'm not suggesting you do this as I don't think it's a good use of funds nor do I know enough about your situation, but you can recreate most of the savings they're touting by simply calling your current bank's customer service and telling them you want to pay down $31K and you want the loan "recast" with the payment. This will lower your payments somewhat and save you the hassle of refinancing now for such little value.

Finally, I would evaluate your current situation and how long you envision staying in your current home. That could play into what product you choose as a 30 year fixed might not necessarily be the right fit given your plans.

Good luck.