The conventional wisdom is that the interest rate should be lowered by
2% or more to recoup closing costs within two years. However, creative
and less costly new refinance programs mean that you can benefit even if
the rate is only lowered by around 1%.
The best principle to follow is to refinance your home if you can pay
back the closing costs in less time than you will be living in that home.
If your principal is high, even a small reduction in the interest rate will
pay off in long-term savings.