I got an e-mail from the company that brokered our mortgage loan offering me a great opportunity to refinance at a lower rate and save almost $200/month. Seeing as the rate drop was only 0.25% I was curious as to how so much money could be saved, as presumably they would be making some money on the refi as well. Running the numbers they gave me revealed that the exact amount to the penny that they quoted as the new monthly payment was for a 30 year mortgage at the quoted interest rate. But I have already been making payments on a 30 year mortgage for a few years now and don't have any interest in extending my mortgage out by the number of months I have already paid.
When I ran the quoted rate for the lower number of months remaining on the mortgage, it still showed a monthly savings, but much less, slightly under $50. While this is a much worse deal it still appears to save money, assuming that they have rolled all their costs hidden into the loan somehow. If this case, is it still "worth" it? And if so, how little savings justifies refinancing? $40/month? $20/month? $1/month? It seems at some point it gets silly, but I don't know how to quantify what hidden costs besides money would be used to determine this, how much time it takes to deal with paperwork, affects on credit ratings and other intangible effects which may be hard to pin down and any other unknowns I don't know.
Is there some rule of thumb for how much per month in savings justifies a refi?