As the interest rate has dropped for a 30 year fixed rate mortgage in the last few months, a large amount of homeowners have missed opportunities to refinance, losing them big savings on their purchased real estate. According to Black Knight Financial Services, approximately 6 million borrowers met broad-based refinancibility criteria. Black Knight chose their criteria based on the good loan to value ratio, good credit, non-delinquent loan status, and the current interest rates being given to current mortgage payers. However, as rates have continued to drop, the number of people who would benefit from refinancing increased to 7.4 million. Black Knight believes that even this estimate is conservative and the true figure could even be 1.7 million borrowers higher.
In another study done by the National Buereau of Economic Research, up to 20 percent of Americans failed to refinance loans that would have saved them $45,000 over their entire loan’s lifetime. Now interest rates have fallen since that study took place, possibly raising the potential savings even higher.
Homeowner equity has continued to improve across the states. For 28 months in a row, the value of residential real estate has increased, helping lower borrowers with negative equity to below 8 percent. That number has not been that low since 2007. Black Knight had that number at 33% in 2011.
With these conditions in mind, now may be a great opportunity to refinance a loan and take advantage of these low interest rates.