11-14-2012, 04:05 PM
Your math appears to be correct, but you are forgetting that you'll lose the tax deduction on the difference. Multiply your marginal tax rate by $126,000 and subtract that number from your savings.
Also, you should never pay closing costs on a refi, because you can't deduct them. Get a "no cost" loan where the closing costs are wrapped into the interest rate so that you pay a slightly higher rate. It only makes sense to go for a lower rate loan with high closing costs when you are doing a new purchase.
Also, you should never pay closing costs on a refi, because you can't deduct them. Get a "no cost" loan where the closing costs are wrapped into the interest rate so that you pay a slightly higher rate. It only makes sense to go for a lower rate loan with high closing costs when you are doing a new purchase.