Therefore, even if your rate change is less than one percentage point, you may be able to save some money by refinancing. In refinancing, lenders usually offer a range of interest rates at different amounts of points. A point equals one percent of the loan amount. Shopping for points as well as interest rates may save you money. Generally, the lower the interest rate on the loan, the more points the lending institution will charge.
Some lenders offer refinancing with no points, but generally charge higher interest rates.
To decide what combination of rate and points is best for you, balance the amount you can pay up front with the amount you can pay monthly. The less time that you keep the loan, the more expensive points become. If you plan to stay in your house for a long time, then it may be worthwhile to pay additional points to obtain a lower interest rate. Some lenders may offer to finance the points so that you do not have to pay them up front. This means that the points will be added to your loan balance, and you will pay a finance charge on them.