An old rule of thumb says not to refinance unless you can shave two percentage points or more from your interest rate.

But with the median home price more than doubling over the past decade, homeowners are borrowing more and can reap significant savings by lowering their interest rate by a single point.

A $165,000 loan at 7.5% costs $1,154 in principal and interest each month. Refinance at 6.5% and monthly payments drop to $1,043. Thatâ??s a savings of $1,332 a year and $6,660 over five years. After subtracting the cost of the refinancing, let's say $1,000, youâ??ll still pay $332 less in the first year and $5,660 over five years.

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