Despite record low interest rates, 78% of homeowners decided not to refinance in the past year
While more than half (59%) of those surveyed have refinanced the mortgage on their current home at least once, only 22% of those surveyed said they had done so within the last year. Mortgage rates have been falling since winter 2018, and 30-year fixed rates fell from 3.13% about a year ago to an all-time low of 2.65% in January this year, according to the Freddie Mac Mortgage Market SurveyÂ®, which analyzes the average residential mortgage rates since 1971.
Although prices are slightly above January’s record lows, they are remarkably competitive – 2.93% from as 17th of June.
Homeowners who have recently refinanced rated the process as less difficult than getting a divorce or a strict new diet, but significantly more difficult than training a puppy.
“In general, refinancing a mortgage should be a little less intense than a couple of weeks in puppy bootcamp,” said Jonathan Lee, Senior Director of Zillow Home Loans. “A few hours of online shopping, talking to a mortgage professional, and signing documents are a small price to pay for hundreds of dollars in potential monthly savings and go a long way toward funding those dog training courses.”
Nearly 9 in 10 (89%) homeowners who refinanced in the past year said low interest rates were a reason for refinancing, and nearly 3 in 4 (74%) refinanced to reduce monthly expenses. About a third of homeowners who refinanced did so to pay off debts.
In terms of the monthly savings realized, about 29% of the refinanced saved $ 300-500 per month while 18% more than saved $ 500 per month. Almost half (45%) save less than $ 300 per month, while the remaining 8% saw no monthly savings.
When those who haven’t refinanced recently were asked why, 37% said they were considering deferring or paying off their mortgage soon and 38% said the fees were too high. About 29% of homeowners have failed to refinance because they said they did not understand the process.
A few simple steps can get homeowners on their way to capitalizing on the current low prices, Lee said. Homeowners should consider their financial goals and needs first, and then find a lender they are comfortable with, though Lee said buyers shouldn’t be afraid to bargain to try to cut the outlay related to closing costs . Then you simply set a tariff and go through the normal processes of underwriting, running a valuation, and closing.
Zillos Lender Search Tool provides personalized mortgage and refinance results along with lender ratings to help buyers find and connect with lenders who best suit their individual needs.
Lee said one guideline that consumers have followed in the past is that if you can get a refinance cut by 1 percentage point or more, it should make financial sense. However, the rapid appreciation of homes has brought that number down. Aside from speaking to a qualified mortgage professional, Refinancing calculator from Zillo is an easy way to estimate monthly savings, fees, and breakeven points.
âRefinancing a home currently offers many advantages. The reduction in monthly mortgage payments is extremely popular. It can increase borrowers’ monthly cash flow by lowering the interest paid on their loan, âLee said. “Rapidly rising property values ââmake cash-out refinancing a great option that allows homeowners to leverage their home’s increased equity and reinvest their savings in other areas, such as projects.”
For potential homebuyers hindered by intense competition in a scorching housing market, a refinance from the disbursement to finance Home improvement projects in summer could scratch the itch on their current home for improved quality of life – and higher resale value. Record home appreciation last year means that the owners now have more equity available.
To keep things running smoothly, clients can pre-assemble the necessary documents to review personal income, assets, and financial history. Checking your creditworthiness and waiting for larger purchases to be made are also good ideas, Lee said.
Of those who haven’t refinanced recently, around 2 in 5 respondents (41%) said they are more likely, very likely, or absolutely certain to refinance, while another 28% are more likely. Almost half (49%) of this group believe they will be able to refinance in the next year.
In the second half of the year, ZG DemÃ¶lkerungswissenschaft surveyed 1,359 homeowners with mortgages who had not moved in the last 12 months April 2021. In addition, 242 homeowners who refinanced themselves in the past year were surveyed to enable statistical comparisons. The survey measures why household decision-makers refinanced or not, refinancing barriers and the use of savings. To ensure national representativeness, quota samples and statistical weighting methods were used. The main sample of homeowners was weighted with the 2019 American Community Survey and the over-sample of homeowners who refinanced was weighted with the 2018 Zillow Consumer Housing Trend Report (CHTR).
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