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Calculating Future and Present value into mortgage comparisons
Using the fact that you'd save $160/mo by spending $7000, I'd look at it this way -  If I were to lend you the $7000 at 12%/yr, $160 would pay it off in 58 months. At 18%/yr, 72 months or just 6 years. You can run spreadsheets to get breakeven scenarios, and mhoran is on track with his answer, but breakeven is just one point to consider. Beyond that date, it's free money.  My approach is to look at it with a question - "How much interest could I afford to pay to make that monthly savings worthwhile?"