Interest this week for a 30 year mortgage is at 3.49%. Yet 69% of homeowners are paying interest rates of 5% or above, and a third of those are paying over 6%. that means that those currently paying between 5-6% are paying around $90 to $150 more per month for each $100,000 of their mortgage. And those paying above that 6% are paying even more.
It is ironic that one of the main reasons why people are paying more than they could or should is that they can’t afford to pay less. Many that haven’t refinanced have been hurt by the current economy and may be unemployed, under employed, or in financial distress, making refinancing difficult, if not impossible. Others have found themselves underwater on their mortgages, resulting in their inability to get a loan.
But there is also a significant number of people who could be refinancing that aren’t. They have either not tried because they heard banks aren’t lending or have tried but run into loan officers that are just cherry picking the easy loans and may not bother with some more difficult refinance’s.
With loan volume picking up lenders and loan officers may be looking for higher mortgage loans that provide higher commissions and easier loans that take up less of their time so they can work on more loans quickly for more commissions. But just because a couple of loan officers say no doesn’t mean these borrowers should give up. Some loan officers are willing to work with homeowners and are getting their customers loans despite them being told no by others.
So if you are a homeowner with an interest rate over 5% it is worth your while to make the effort to refinance. After all most people can’t expect a $100 per month or more raise any time soon, so why not try to reduce the expenses to compensate.