As mortgage rates in the United States remain at record low levels, experts have been urging people to lock down on the current rates and refinance an existing home loan to benefit from the low rates.
Recent reports by several agencies shed light on how much a borrower can save currently if they took out a refinancing loan on today's average rates.
Black Knight Financing Services' recently released a report that showed about 7.4 million people were eligible to take out a refinancing loan on today's average rates. Black Knight analyzed the state of equity currently prevailing in the market and the "refinancible" situation in the country using its average home price index and mortgage database.
The report found that as mortgage rates inched lower, about 25 percent of the borrowers could benefit from getting a refinance on their existing mortgage shot up considerably.
"In light of where rates are today, and looking at borrowers with current notes at 4.5 percent and above, that population has now swelled to 7.4 million -- almost a 25 percent increase. This is a relatively conservative assessment though, as those with current rates of 4.25 to 4.5 percent could arguably benefit from refinancing as well. That group adds another 1.7 million borrowers to the population," Trey Barnes, Black Knight's senior vice president of Loan Data Products, said in a statement.
Another recent feature by The Orange County Register quoted experts who said that people who took out a refinancing loan could easily lower their mortgage payments by a few hundred dollars.
"...borrowers typically pay 1.35 percent on top of their interest rate for private mortgage insurance, creating an effective rate of almost 5.4 percent, he said. Many of them now can get conventional financing for up to 95 percent of their home's value and shed the mortgage insurance," the feature read.
Don't know if you should get a refinancing mortgage now? According to Dan Green of The Mortgage Reports, you need to get a refinancing loan now:
- If your mortgage rate is over 4.50 percent
- If you have an existing FHA Mortgage
- If you have an existing VA Mortgage
- If you are paying mortgage insurance
- If you have been turned down for a mortgage.
Industry lending standards are poised to loosen up in the coming months. Small lenders have already started obliging slightly risky borrowers. A September survey of Last 75 domestic banks and 23 U.S. units of foreign banks by the U.S. Federal Reserve revealed that there was a widespread ease in lending on the increasing demand for mortgages.
So what are you waiting for?
