refi with cash out to pay points (fixed rate, interest, rate)

[macroy]

So, looking at Refi with cash out... and using part of that cash out to pay the points for a lower rate. Does that make sense to do?

I sort of did the math and got the following:

20 yr fixed rate at 5.765 (apr) or 5.446 with 2.5 points.

For every 100K I'd be paying approx - 68705.63 in interest after 20 years.
If I paid the points, I'd have to borrow $102500 to pay for the points, which comes out to be 65970.88. Thus, still saving me ~2100 per 100K borrowed.

Is this logic flawed? Something just tells me that borrowing money to pay to lower interest rates seems redundant....

[Daddys///M3]

It almost is when you are talking about less than $10 a month, but $2100 is still $2100.

[jeffselan]

It really depends on how long you want to be in the home. Do a break even and see if it makes sense. The trust is, most families don't stay in their homes full term and you might lose money.