Millions of borrowers can save through refinancing
Around 6.5 million mortgage borrowers are eligible for, and could benefit from, refinancing options for their home loans.
Black Knight Financial Services’ “Mortgage Monitor Report” found that substantial savings wait for borrowers who alter their home loans through refinancing options. The financial services firm took a look at 30-year mortgages as well as current underwriting criteria to determine how many people would quality for refinancing, and what their options would be. It was noted that even the slightest change to rates could completely alter how many people would qualify for - and benefit from – refinancing.
“It’s important to remember how rate-sensitive this population is, too,” Ben Graboske, senior vice president of data and analytics at Black Knight, explained in a press release. “[I]f rates go up just half a percentage point, 2.6 million people fall out of that refinanceable population.”
The financial services firm found that, via traditional refinancing, some 3 million people could save around $200 per month on mortgage payments. Another 500,000 could save up to $500 monthly.
Mortgage rates remain close to historically low levels, which is why so many borrowers are eligible to save so much. Though rates have ticked up in recent months, they are substantially lower than they were before the recession. However, experts expect interest rates to continue to tick up, possibly reaching 5 percent before the end of 2015.
If rates do rise to 5 percent, that would significantly increase costs for borrowers. Such a rate increase would be equivalent to an approximate 13 percent rise in home prices, according to Black Knight Financial Services. This is why it is important for borrowers who would like to save on their home loans to look at refinancing options sooner rather than later, while rates are still hovering closer to 4 percent than 5 percent.
By: Equity National July 20, 2015 Closing, Title