You have a pretty good rate now. Would it make enough difference in your payments to pay back the costs involved? Also, better check with your current lender as they may have a prepayment penalty that would really cost the bucks. If you do go ahead, check with several lenders and get written estimates of closing costs. There can be literally hundreds of dollars difference between lenders.

tate16t,LDoyle is right adout his answers.What I can add is that 6.8 is O.K. but you can do much better.I am refinancing right now at a rate of 6.37.Well I just checked and the rate has fallen to 6.18.So now I have to decide whether to hold at this rate or buy down to the new rate.So, you see you should check several banks to get the best deal.

Dropping your rate by 1/2 percent may not be beneficial. Closing costs could eat up the reduction in interest cost for many years to come -- probably longer than you'll keep the house, if you're the "average" homeowner.
Get all the details and compare carefully before making a decision.

Hi Tate:

FYI - I am in the RE profession, so we get this ? a lot. As stated by the lending professionals we deal closely with - it is generally not beneficial until the rate drops two (or more) points below what you are currently financed out - to average the difference of costs of 're-fi' into the equation - and to make it worthwhile for you. FYI - as an aside - we are in a similar situation - lived here 3 years, financed @ 6.725 - You don't have a bad rate, and it'll be hard to refinance low enough to make it worth your while. Maybe you wish to consider prepayments on your principal - which will significantly decrease the amount of interest paid on your loan. You can do a search for a mortgage amoritization calculator, (there are many available online) - and this will allow you to see your interest savings in details, varied by the xtra principal you choose to pay.

Hope this helps!
WJKing

The basic guidline to refinance or not is will you recover your closing costs in one years time and if the new rate is between 3/4 and 1% lower than the old one. If you are going to be saving a good amount of money a month apply a bit extra to the principal. that will bring the time of your mortgage down. 1 extra payment per year can shave about 6 years off of a 30 year mortgage. I am a realtor in michigan and I have found a good local mortgage broker is the best way to go about getting a refi or any loan for that matter, they are usualy a bit more straight forward than a bank and much easier to deal with, if you were in michigan I could hook you up with a good bunch of people, if not then find someone you trust (family, friends) and ask them who they go through and if they are happy with them. good luck in your search