Is it worth it to pay the cost of refinancing with only ten years left and a low principal balance?

Ed from Orlando called into the show with a unique situation. Ed is eighty years old and owes fifty five thousand on his existing loan, however his interest rate is fairly high at a 5.8%. He called Robert Palmer to ask him if there is away around paying $3000 in closing cost and if it would be worth it to refinance at this point?

Half of the cost of refinancing or taking out a loan are lender fees. The other half are title, taxes, and appraisal fees. At RP Funding we don't charge and lender fees therefore cutting the cost in half. You will pay about $600-700 in title fees, $600-700 in state taxes plus the appraisal. Estimating about $1500 in closing cost. Another option would be to take a higher interest rate and the lender can pay the closing cost. Since Ed is considering a ten year mortgage he is looking at a rate as low as 3.25%. With fees around $1500 the first 3% savings will go towards closing cost which can be made up in about eighteen months. In this situation as a consumer you have to ask yourself whether the small amount of savings is worth the hassle. Another option to look at is a refinance with cash out. If you needed cash for anything you could probably take 20-30K out of the home and keep the monthly payments roughly the same since rates would be significantly lower. That could make it worth the cost. If we are speaking from purely a financial standpoint this situation is right on the border of if it would be of benefit.