I had lunch with a good friend yesterday. Among the topics we discussed was whether he should refinance his mortgage. He'd been to see a mortgage lender but came away frustrated.

The mortgage refinance officer he'd been to see frustrated him because to my friend it seemed like all he wanted to discuss was the lower monthly payment amounts. His current mortgage is a 15 year loan. The new one he was looking at was a 30 year loan at a slightly lower rate.

But my buddy wasn't interested in reducing his monthly payment at all. He only wanted to know whether he'd come out ahead in refinancing his mortgage to the new rate. His meeting with the banker ended in frustration for both parties.

I got to thinking about his situation and did a quick analysis to see what the effects of refinancing his mortgage might have been. The numbers I'm using here are hypothetical but they do reflect his situation. In other words, I don't know what his mortgage principal and interest rate are; but I do know he's been paying on his existing 15-year mortgage for about 7 years.