refinancing- closing costs rolled into mortgage, yay or nay?

our current rate is 4.875 30 yr conventional. we got a quote for 3.5 with closing costs (approx $5000) rolled into our mortgage.
This would lower our mortgage $159 a month.

we do not have money for closing right now but is this something that sounds kosher? saving $159 a month is enticing but i know we will be paying interest on $5000 in the long run,

is it better to leave things the way they are or refinance?

what questions should i ask? tia!

Message edited 1/28/2013 4:19:44 PM.

Re: refinancing- closing costs rolled into mortgage, yay or nay?

we refinanced this year and our accountant had told us that the "rule" was to refinance when you would save 2 percentage points.

With the deal you have above, you are saving $159 a month but it will take you 31 months to realize that savings because of the closing costs-- and that doesnt include the interest on top or the fact that you are extending the term of your loan

Re: refinancing- closing costs rolled into mortgage, yay or nay?

Also keep in mind you will be resetting the 30yr clock. Depending on your ages and your ability to pay down a mortgage early you may want to consider the long-term effects of resetting the clock.

DH & I will both be 40 this year and the only way we will even consider refi is if we can get a 15yr.