Rates are ticking ever-so-slightly upward but they’re still at historic lows; homeowners who haven’t refinanced in the past year or so could be losing out on hundreds of dollars in potential savings a month. Of more than 1,300 owners recently surveyed, 78% hadn’t refinanced in the last year. But for those that did, 29% saved between $300 and $500 per month. Nearly 1 in 5 saved more than $500 a month.
There are many benefits to refinancing your mortgage, especially at today’s low refinance mortgage rates. From lowering your monthly payments, to consolidating debt, to tapping your home equity for cash—a new home loan could help improve your financial picture in the short- and long-term.
Better Mortgage analysts expect rates to continue inching upward (though they’re not likely to rise beyond 3.25%), so now is the time to get the ball rolling by finding out how much you could save. If you’re not sure how the process works, you’re not alone—29% of non-refinancing homeowners said the same thing. Our guide to the refinance timeline can help you get up to speed. The first step is getting pre-approved, which can be done in as little as 3 minutes with Better.
Also, refinancing could help you remove PMI
Market values of homes around the country have risen by a record gain of 17.7% in the last year, and the typical U.S. home was worth over $5000 more in August than it was in July. That puts today’s homeowners in a good position to drop their private mortgage insurance (PMI) when they refinance.
Private mortgage insurance (PMI) is added to your monthly mortgage payment as a buffer for some of the financial risk your lender takes on. If you put less than 20% down on your loan, it gets automatically applied. For conventional loans, PMI gets removed once you’ve gained 20% of your home equity. This happens as you pay off your loan, or when your home goes up in value.
If you’ve been paying for PMI each month, it’s probably a good time to refinance and see how much your home is worth today. Your appraisal gives you an updated loan-to-value ratio (LTV), which can lower the price of the refinance, qualify you for more favorable terms, and drop PMI from your monthly payment.
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Better.com was awarded NerdWallet’s 2020 Best-of Award winner within the Best Mortgage Lender for Refinance category. Get your custom rates in minutes with Better Mortgage. Their team is here to keep you informed and on track from pre-approval to closing.