A general rule of thumb is that refinancing becomes worthwhile if the current interest rate on your mortgage is at least two percentage points higher than the prevailing rate. This minimum spread is required in order to meet the costs of penalties on your existing mortgage and closing costs. If you are increasing your existing mortgage, which would be necessary to cover the costs of any penalties, then legal and possibly appraisal costs may be incurred. You must also consider how long you are planning to stay in the house. It usually takes at least three years to make up for the costs of refinancing.