Wednesday
June 1, 2016

How 5M Buyers Could Save Big

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How 5M Buyers Could Save Big

Mortgage rates have been near record lows for years, but still more than 5 million borrowers who could qualify and benefit from refinancing have not taken advantage, shows a new report from Black Knight Financial Services.

Mortgage rates have recently fallen back below 4 percent. That means about 2.4 million borrowers stand to save $200 or more on their monthly mortgage payments. An additional 1.9 borrowers could save $100 to $200 per month.

Read more: Refinance Rush Ahead of Fed's Decision

"If rates go up 50 basis points from where they are now, 2.1 million borrowers will fall out of the running; a 100-basis-point increase would eliminate another million, leaving only 2 million potential refinance candidates, the lowest population of refinance candidates in recent history," says Ben Graboske, senior vice president at Black Knight Data & Analytics.

As such, borrowers who want to see savings better act soon. Mortgage rates are largely expected to rise this year.

While rising home prices have given more home owners equity in the last year, home owners who haven’t seen prices rise as much can take advantage of a government refinance program called HARP. The program is geared for those who have loans backed by Fannie Mae, Freddie Mac, and FHA and who still owe more on their mortgage than their home is currently worth. Black Knight estimates that about 430,000 borrowers could still benefit from HARP.

With rising home values, Black Knight also predicts a rise in home owners taking out of home equity lines of credit, or HELOC. The popularity of HELOCs increased in 2015, up 35 percent year-over-year. About 37 million borrowers are estimated to be able to pull out an average $112,000 before hitting the amount of equity most banks require them to keep in the home.

California is the state that has the most borrowers eligible for a refinance or HELOC, according to Black Knight. Meanwhile, Texas and Florida are next with the most home equity that can be tapped.

Source: “Why Home Owners Are Leaving Billions on the Table,” CNBC (Jan. 11, 2016)