Your loan officer will have the current interest rates available for the loan program you’ve chosen. These rates, and the term (how many months) of your loan will determine your new monthly payments. Subtract the new monthly payment from your old monthly payment. For example, $980.00 (your old payment) minus $720.00 (your new payment) = $260.00 per month savings. Now, let’s say it costs you $2,500.00 for all of your loan costs and fees. Divide $2,500.00 by $260.00 to find out how many months it will take you to recoup the costs of your loan. In this case, you will have your new loan for a little over 9 1/2 months before you will break even.
The good news is that from then on, you will save $3,120.00 every year. And if you have a 30 year loan and stay in your home for all of the 30 years, you will have saved $93,600.00 on the price of your home.