In order to analyze how much the interest rate must drop before I refinance, one would have to calculate the closing costs and the monthly savings. Once we know how much money you are saving every month, we divide that monthly savings by the total closing costs to find your breakeven point as to when you will recover the cost of the refinance. Everything after that breakeven point equates to savings. Depending on loan size and other variables, we often structure loans to ensure we make sense for clients to refinance. For instance, there are certain situations where we pay all of the closing costs for clients which therefore allows the client to refinance without having to have a large drop in rate. For example, a client has a 300k loan at 5% and we refinance down to 4.25% but the bank pays all the closing costs. The savings is $135/mo which is not a tremendous amount, but if its free, how can you say no.