Dear EchoBay Expert:

Dear Loyal Reader: Calculating the breakeven point for your loan is a smart thing to do. To calculate the breakeven point, you need to know your current mortgage payment, the proposed mortgage payment and the amount of closing costs.

The formula is: closing costs / (current payment - proposed payment) = # of months to breakeven. For example, if your current payment is $1,050 and your proposed payment is $875 with $4,500 in closing costs, it will take you 26 months to breakeven. $4,500 / ($1,050-$875). This means you must stay in the house for at least 26 months to breakeven.

After that point, you will be saving money by refinancing. If you sell your house before then, you will have lost money on refinancing your mortgage because of the closing costs even though your payments are lower.

Some people jump at a lower interest rate without taking into consideration how much longer they plan to stay in their home or what their breakeven point is. This calculation is a must for any one who is considering refinancing their mortgage.

Dear EchoBay Expert:

Dear Loyal Reader: If your only mission is to refinance your home to the lowest interest rate, probably not. They should be contacted along with other lenders to ensure you are getting competitive rates. Now, if you're only looking to get the lowest mortgage refinance closing costs, the cheapest way to refinance is usually if your loan servicing company is the loan originator and still owns the loan.

If they are willing to, they could complete the refinancing without charging additional fees for costs such as application fees, title searches, appraisal, etc. Many times the loan company that approved your original loan was a broker and never owned the loan or if they did, have sold your loan to another servicing company. If this servicing company doesn't originate loans, then you can't refinance your mortgage with them.

The bottom line is if your loan originating company still owns your loan or if your loan servicing company originates loans, they may be willing to cut you a deal on the costs to refinance your mortgage. Otherwise, your best bet to finding the lowest rates is to search multiple lenders.