Americans are averaging a mortgage debt of $201,811 across the country according to a recent report by Experian. Many will argue this is rather too low or too high depending which state and city you live in. Although Americans have such high mortgage debt, they often are not taking advantage to lower their interest rate or even shorten their loan term. One of the best ways to get these benefits is to refinance their mortgage. Which simply put just means to change the terms of your current mortgage or to replace it completely. Refinancing can open the doors to huge savings and benefits, yet people are still missing out on over $13 billion in savings every year, according to a recent analysis on mortgage loan figures.
Paying Too Much for Your Mortgage?
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From the 2015 Black Knight report, we can see that about 5 million homeowners with sufficient credit scores missed out on savings upwards to $215 every month. Those homeowners missed out on all those savings because they failed to refinance their home even when they qualified. Homeowners could have saved even more depending at what point in the year they refinanced due to changing interest rates. These lost savings could possibly add up to thousands of dollars saved throughout the life of the loan term.
Low Refinancing Numbers
So what exactly is keeping Americans from refinancing? Well from a recent study done by Brigham Young University we can begin to see why Americans are not refinancing. According to the study they discovered that after mailing out three waves of letters stating pre-approved refinance rates, only 16% of people responded to the letter. Further studies have shown that many people do not refinance simply because they do not understand the process. As well as many more do not even realize they qualify for refinancing. Another reason homeowners are cautious about refinancing is because of their growing distrust of banks. Refinancing can be a costly and tiresome process but in the end can save you plenty of money. Even though refinancing will come with its fees, the hundreds or thousands you can save are almost always worth the cost.