2019: The Year of the Refinance
There’s been an enormous mortgage boom over the past few months, but you might not have noticed because it most likely didn’t cause people up and down your street to move into bigger homes. And it didn’t mean neighbors were packing up the moving vans to relocate.
Instead, due to the dual effect of home values rising rapidly while interest rates were dropping steadily since May, millions of people decided to stay right in their homes and refinance their mortgages to better suit their individual situations. In fact, according to CNBC, refinancing numbers in August 2019 were up 116% over last year!
This boom goes to show you how fast the market can turn. Just last year, the refinancing market had pretty much dried up. But with interest rates remaining low all summer long, refinancing is as hot as ever—so much so that many mortgage companies are scrambling to keep up with the demand.
So, why refinance?
With rates reaching lows not seen since 2016, homeowners this summer found it especially enticing to review their mortgage and see if they could lop a little off their monthly payment. This was especially true of Millennial homeowners, whose refi application rates made up 14% of the refinancing market versus just 8% last year.
Refinances are attractive because they could give homeowners who are happy with their home (or just aren’t looking to move) a great opportunity to get a lower rate, have some extra money in the bank each month, adjust the length of their loan to better fit their situation, get cash out to consolidate some larger bills, or do some renovations to make their good home even better. Bottom line? A homeowner’s bottom line could improve with a refinance.
Millions could save billions
Don’t think that all of the refinancing that has already happened this year means the market for refinanced mortgages has dried up, either. Right now there are approximately 11,700,000 people in the country who could still save on their mortgage if they were to refinance. How much could they collectively save? Well, obviously every case is different, but the math shows that if each of those people saved just $87 over the entire life of the loan, that would equal $1,000,000,000 in collective savings.
But what if that refinanced mortgage put an extra $87 a month in their pocket? Or $100? Or $200? Every month. For the life of the loan. On a 30-year loan, that $200 in monthly savings would equal $72,000 in their pocket over the course of the loan! That’s a lot more money for homeowners to spend on the things they love, pay off credit cards, or just build up that nest egg.
Is refinancing right for you?
Does a refi make sense in your case? Your favorite loan officer can provide you with a definitive answer, but the odds are that if you haven’t had a mortgage review in the past year it’s worth a look. Getting either a lower rate or adjusting the length of your mortgage could make a big difference in how you plan your financial future.
After all, if you love your home, why not stay there and potentially pay less to do so?
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information. Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.
Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Guaranteed Rate, Inc. for current rates. Restrictions apply.