According to a new analysis, nearly a third of homeowners with a mortgage could save almost $ 300 a month because mortgage rates are near record lows.
Approximately 15.6 million homeowners, or 30% of those with a mortgage, could reduce their monthly payment by $ 289 if they refinance, according to figures provided to Yahoo Money by Black Knight, a research and analysis firm at loans. The calculation comes as the average 30-year fixed mortgage rate rose to 3.01% this week, after hitting a record low of 2.98% last week.
If all eligible candidates were to refinance, that would equate to $ 4.5 billion per month in total savings, a potentially significant and much-needed boost for the economy. But the savings can be elusive for many of the millions of Americans who remain unemployed.
About 15.6 million homeowners, or 30% of those with a mortgage, could reduce their monthly payment by $ 289 if they refinance, according to Black Knight, a loan analysis and research firm. (Photo: Getty Creative)
“In theory, there is no reason why [those] Homeowners shouldn’t be able to refinance and save money, ”said Jeremy Sopko, founder of Nations Lending, a mortgage lender. “The reality is that people are struggling and job insecurity will have a big impact on whether or not those people can refinance.”
The window of opportunity can only apply to the most solvent and solvent borrowers, or those with a credit score of 700 or above, given the uncertain weather.
“Lenders are navigating a housing market, facing constant uncertainty due to the impact of the COVID-19 pandemic on the overall economy,” said Joel Kan, associate vice president of economic and industrial forecasting for the Association of Mortgage Bankers, a commercial organization.
If all eligible candidates were to refinance, that would equal $ 4.5 billion per month in total savings. (Photo: Getty Creative)
Major banks, such as JPMorgan Chase, have already raised the minimum credit scores to 700 and now require a down payment of at least 20% for new home loans.
“Mortgage lenders are being extremely cautious about who they lend to, in part because of the fear of borrowers who immediately apply for loan leniency, before the issuer can sell the loan,” said Jeff Tucker, economist at Zillow.com . “This is putting pressure on lenders to effectively reduce their credit box, especially by reducing access for borrowers with FICO scores below 700.”
Strict credit requirements aren’t the only factor that can hinder Americans. Job security is also another major concern for lenders.
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In the past four months, more than 51 million Americans have filed unemployment claims, and another 1.42 million workers filed last week. Those Americans may be excluded from taking advantage of the pricing environment.
“Interest rates have never been lower, after all, and the vast majority of homeowners should be able to benefit,” Sopko said. “In principle, however, it is much more complicated since the same person who theoretically could qualify for a refinance today, who has a great job and a stable income, could be without those things tomorrow.”
