For example, despite the fact that most banks and loan programs will allow homeowners to “roll in” the costs of refinancing so they have, in effect, “no money out of pocket”, the costs to refinance often result in the new loan balance being significantly higher than the previous loan balance. All homeowners should compare their current loan balance with the proposed new balance and then divide the increase in the amount their loan is increasing by the amount of monthly savings (if refinancing to a similar term). If the monthly savings is, say, $100 but the cost to refinance is $6,000, the break-even point is 60 months (five years).

So in this scenario, a buyer would lose money if they decided to sell their home in less than five years.

Morale of the story: Just because a refinance is “no money out of pocket” at closing doesnt’ mean it’s not going to be money out of your pocket at some point. A little simple math can help determine whether or not it’s beneficial for you to refinance…

Article from MSNBC