is there a rule of thumb for refinancing?

Our mortgage is 5.87% for aboubt $300,000. We also have a home equity loan for over $80,000. The % changes on that loan, but it's at 7.2% right now, variable.

Is it worth it to refinance, absorb the home equity loan at a rate of 5.5% or would it have to be lower to make financial sense?

Re: is there a rule of thumb for refinancing?

Just based on the #'s ...no...Your refinancing costs will eat up whatever you might save in interest on the HELOC. Usually, one shouldn't consider refinancing unless it's a least 1pt/100bp below the current rate.

Additionally, the 1st mortgage and 2nd mortgage are different deductions on your tax return.

Re: is there a rule of thumb for refinancing?

You want to think about how long you are staying in the house. The cost of doing a refi on a loan your size if you do it with the same bank would probably be around $4000-$7,000. If the rate is for example 5.75 you would save about 1200 a year in interest. If you are staying in the house for the next 30 years then DO IT. If you are planning to move in the next three to five years then it would not pay.