Mortgage rates have seen record lows this year and now the number of borrowers who can benefit from a refinance is, well, a lot. Here’s how some homeowners may be leaving money on the table by not refinancing.
With the average rate on the 30-year fixed mortgage hitting a three-year low last week, it is estimated that 8.2 million borrowers could refinance and lower their interest rates by up to a point. The average borrower could save about $266 per month, bringing the total amount of potential savings to about $2.2 trillion! 6.3 million eligible borrowers have become eligible candidates since last November, when rates peaked at just over 5%.
While most borrowers tend to refinance after several years, about 1.5 million borrowers, or 35% of those who took out their loans just last year, could benefit greatly. No surprise that refinances have jumped in the past few months as rates began their decline. Mortgage applications to refinance a home loan are up 92% over last year, according to the Mortgage Bankers Association. Refinances for loans originated in 2018 are leading the way, up 300%.
Customers with ARMs (adjustable-rate mortgages) are seeking refinancing as a way to get into a secure, low, fixed interest rate. Refinances on ARMs have now jumped to their highest level since 2007.
Of course, refinancing can lower monthly payments, but it can also provide an opportunity for homeowners to access cash from their homes if they have sufficient home equity. And, given the steep rise in home values over the past three years, homeowners are sitting pretty. Currently there is $5.98 trillion in accessible equity in the U.S.
You may be looking to lower the rate, payment, and/or term of your loan. Or perhaps you’re finally ready to get out of your adjustable rate loan. Maybe you need to access the equity in your home to pay off credit card balances with high interest rates or make some home improvements. In any case, feel free to contact us to review your options. We will provide you with a no cost, no obligation consultation that will help you meet your financial goals.