Using flu’s spreadsheet, and a 2.5% discount rate and the prior 1.5 point spread from the $400K loan ( applied to Flu’s loan for example), his lowest total discounted cost would be to pay the points and current payment. Basically adding 50% to his present value savings over current by paying up front.

We get the following NPVs.

Existing Loan 1 run to completion:
NPV cost $576K.

Loan 2 with current payment:
NPV cost $557K. $19K net savings.

Loan 2 with 30 year payment:

NPV cost $566K. Still better than current (provided he’s not paying $10K to do it. 😉 )

Loan 3 (not on sheet), pay the 1.5 pts spread in HLS example, drop rate to 3.5% 30 yr standard amort payment instead of loan 2.
NPV cost $557K. That amount includes the $7500 paid up front to close. Note, roll the points in and the NPV remains the same.

Loan 3 with the $7500 (1.5 pts) rolled in and current payment (overpayment):
NPV cost $550K

Loan 3 with the $7500 (1.5 pts) up front and current payment (overpayment):

NPV cost $547K (ugh dropped a minus sign, corrected)