The 30-year fixed-rate mortgage continues to hit new all-time lows practically on a monthly basis. That has dramatically increased the pool of homeowners who could benefit from refinancing and lowering their monthly mortgage payment. In fact, 75% of homeowners—or 19.3 million—could benefit from refinancing, according to data from Black Knight, a software and analytics firm for the mortgage and lending industry. That’s the largest number of potential refinance candidates ever on record, Black Knight says.
The savings could add up. According to Black Knight, the average homeowner could potentially reduce their mortgage payment by $299 a month. More than 7 million refinance candidates could save from $300 to $500 per month. Nearly 2.5 million homeowners could save $500 a month or more, the firm notes.
With savings so great, Bankrate asks: Why on Earth haven’t 19 million homeowners refinanced yet? “The same reason people don’t go to the dentist regularly enough even though they should—it’s no fun,” says Greg McBride, Bankrate’s chief financial analyst.
To refinance, borrowers will need to compile tax returns, bank statements, paychecks, and additional documents. But besides the tedious task of refinancing, many homeowners also may be leery due to interruptions in their incomes from disruptions to their job during the pandemic—or they may even have lost their job. Further, closing costs can add up. Costs range from 2% to 5% of the amount of the loan.
“Refinancing isn’t free, and sometimes it’s tough for people to look past the out-of-pocket costs incurred now for savings that will take years to accumulate,” McBride says.
For homeowners who are eligible and can afford it, the potential to lock in some of the lowest mortgage rates ever could be appealing. The 30-year fixed-rate mortgage reached a new all-time low, average 2.86%, for the week ending Sept. 10, Freddie Mac reported.