Is it worth paying the closing costs to consolidate my first mortgage and my home equity loan?
You’ll need to figure out your breakeven period and see for how many months you’ll need to have the new loan before you come out ahead after paying closing costs. The shorter the breakeven period, the better. Your lender may let you finance your closing costs, which eases the sting of this added expense in the short run. However, by rolling closing costs into your loan, you’ll be paying interest on them for years to come. Another alternative to paying closing costs is to pay a higher interest rate. However, as you’re probably trying to get a lower rate by refinancing, this isn’t the most promising strategy.