With the economy the way it is and interest rates relatively low, a lot of people are taking a look at refinancing their mortgage. While this won’t always work well in bubble areas where appraised values have dropped below the outstanding loan value, in most other places of the country it can work rather well.

There are several places recently I’ve seen a 4.25% 90% LTV (loan to value) mortgage with no points, so we’ll go with that for the current deal. Most of the people I’ve talked to for this article have mortgages between 6% and 7%, so we’ll base the savings on 6.5% for 30 years.

For an average home price of $250,000, refinancing from 6.5% to 4.25% results in a savings of $126,000 over 30 years ($568,800 vs $442,800)! Even the tax-adjusted numbers (25% bracket) of a $94,500 gain isn’t too shabby.

Although I’m not an advocate of paying down your mortgage unless you have a lot of extra money lying around (this is another topic for another day), you could use the monthly savings to pay down the principal on your mortgage if you’re already maxing out your IRA and 401(k).

For an even more striking number than that, your monthly payment will drop an average of $350. That’s $350 a month that could go towards paying high-interest revolving debt, funding your 401(k) or into a savings account. With cashflow being one of the more important things in life, isn’t that worth going to the bank for a few minutes to get an estimate?