It looks like you will save about $400 in cash flow on an ongoing basis. (It will save a little more in the short term, given the escrow shortage.) If that increased cash flow can be put to good use, or it it takes you from negative monthly cash flow to positive cash flow, then it seems like a reasonable move.
While you are changing your finances around, this might be a good time to look at all your spending to make sure you’re running efficiently. Ideally, that $400 monthly upside would go to savings or investments. That upside comes at a cost of higher interest for the life of the loan, so it’s important to maximize the benefits of this decision.