by 
The Curious Bag
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<h4 class="dechead">On One Hand: Refinancing Can Save You Money
Even a 1 percent drop in your mortgage's interest rate can save you thousands of dollars over the life of the loan. If you haven't had your current mortgage for very long, you will stand to save the most by refinancing for 1 percent. This is because payments you make early in the life of the loan are mostly interest.
On the Other: Not Everyone Will Save
If you are close to paying off your current mortgage, a 1 percent interest rate drop is not worth refinancing. If you refinance and extend your mortgage terms, you will also end up paying more money in the long run, despite the drop in interest rate. Refinancing also comes with out-of-pocket closing costs.
Bottom Line
Evaluate your financial situation carefully before refinancing. Calculate how many months of lower payments it would take to recoup your refinancing costs. If you are in the early stages of a mortgage that you will not extend with the refinancing, and you plan to live in your home for several years, refinancing for 1 percent may be right for you.
Source:
Federal Reserve: A Consumer's Guide to Mortgage Refinancings
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