78% of homeowners didn’t refinance their mortgages in the past year, according to a survey: why you should do it now

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Refinancing your mortgage is a smart move right now thanks to low average rates, but according to a new study by Zillow, millions of homeowners have yet to take advantage of this opportunity. (iStock)

Record low mortgage rates have given millions of American homeowners the opportunity to lower their monthly mortgage payments, save money on interest, or even pay off their mortgages faster through refinancing. Just over a fifth (22%) of permanent homeowners have refinanced their mortgages during the past year. according to a Zillow survey conducted in June 2021.

But what about the vast majority of homeowners who haven’t refinanced? Millions of consumers are missing out on current mortgage rates and there may not be enough time to keep rates low.

Lock in your mortgage rate today with pre-approval on Credible. You can compare mortgage rates from multiple lenders immediately without affecting your credit rating, so you can shop around to get the lowest rate possible for your situation.

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Top Reasons Homeowners Didn’t Refinance

One of the main reasons homeowners did not refinance in the past year is because they considering moving or paying off a mortgage soon – 37% of Zillow survey respondents said so. This makes sense because you may have to live in your home for several years after refinancing to get full savings after you pay the closing costs.

Mortgage refinancing fees have prevented 38% of homeowners from refinancing. But the savings on refinancing usually outweigh closing costs after a period of time, making refinancing a smart financial move for many homeowners despite the commission.

About 29% of homeowners fail to refinance simply because they don’t understand the process, a mistake that could end up costing them thousands of dollars in interest savings. While refinancing your mortgage may seem like a daunting task, it is actually quite simple. Contact an experienced loan officer at Credible, which walks you through the mortgage refinancing process so you can figure out if this option is right for you.

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Homeowners Refinancing Last Year Cut Payments by Hundreds

Most homeowners who refinanced their mortgages in the past year have cut their monthly payments by at least $ 300, the Zillow study found. About 29% saved between $ 300 and $ 500, and nearly a fifth (18%) saved more than $ 500 a month.

By saving money on mortgage refinancing, homeowners use the extra money to meet other financial goals. A third of homeowners refinanced to pay off debt. This can be a good strategy for repaying high interest credit cards and mortgage rates are low. Cash-back refinancing can also provide you with the opportunity to leverage high net worth and, for example, remodel your home to increase its value.

Nearly three quarters (74%) of homeowners surveyed said they refinanced to cut their monthly expenses, which is a good way to increase your savings potential. Use mortgage calculator from Credible to estimate your new monthly payment after refinancing.

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9 out of 10 homeowners refinanced to take advantage of low interest rates

Mortgage rates are still hovering around historic lows, which means now is a great time to refinance your home loan. According to the study, the majority (89%) of homeowners who refinanced last year did so to take advantage of current interest rates.

However, this environment of low interest rates will not last forever. Federal Reserve System predicts two rate hikes by 2023and the Mortgage Bankers Association predicts that interest rates on a 30-year fixed-rate mortgage will be up to 4.9% in 2023

If you’ve been considering refinancing your mortgage, now is the time to do so. Consider the refinancing rates offered on Credible in early July:

  • 30 year mortgage refinancing: 2.750%
  • Mortgage refinancing for 20 years: 2.625%
  • Mortgage refinancing for 15 years: 2.000%
  • 10 year mortgage refinancing: 2.000%

It is important to choose the lowest refinancing rate for your situation. On average, homeowners can save $ 3,000 over the term of a $ 250,000 mortgage by comparing five rate quotes, according to a study Freddie Mac… You are comparing several mortgage lenders and get free quotes without affecting your credit score on Credible.

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Have a financial question but don’t know who to contact? Write to a safe money expert at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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