Who should be refinancing?

Focused young couple calculating bills, discussing planning budget together, serious wife and husband looking at laptop screen, using online banking services and calculator, checking finances
fizkes / Shutterstock

At the current levels for mortgage rates, some 19.3 million U.S. homeowners are in the sweet spot for refinancing, says the mortgage data firm Black Knight. That's the largest number of refi candidates Black Knight has ever identified, and they represent nearly half (43%) of all Americans currently holding mortgages.

Together, these owners could save $5.8 billion monthly by refinancing — which works out to average savings of $299 a month per homeowner.

Black Knight estimates that more than 7 million mortgage holders could save at least $300 a month through a refinance, and almost 2.5 million could save $500 or more every month.

You're considered a good refi candidate if:

  • You've got a 30-year mortgage with an interest rate you could reduce by at three quarters of 1 percentage point through a refinance — like go from 3.75% down to 3% or better. You might meet this criteria if your current mortgage is only a matter of months old, because 30-year fixed-rate mortgages were averaging 3.72% at the start of 2020.
  • You have a good-to-exceptional credit score of at least 720. If you haven't look at your score in a while, you can get a peek without having to pay anything.
  • You have at least 20% equity in your home, which means you've paid in 20% or more of the home's current market value.

Why refinancers should move quickly

Man's hands typing on computer keyboard next to a hourglass. Concept of time management, business schedule and deadline, for background, website banner, promotional materials, advertising.
PureSolution / Shutterstock

More than 2.3 million mortgage holders started down the path toward a refinance over April, May and June, Black Knight says — the largest number of refi originations during any quarter in about 17 years. The refinance volume during the spring months was running at more than triple the rate of a year ago.

If you're among the 19.3 million who still need to refinance and reap the savings, you may not have much time to waste.

Mortgage rates are expected to go higher this fall as lenders start passing along a new 0.5% fee on refi loans they sell to Fannie Mae and Freddie Mac, the government-controlled mortgage giants that buy most U.S. home loans.

In mid-August, Fannie and Freddie announced that the fee would take effect Sept. 1 — and mortgage rates jumped. Late in the month, a federal regulator delayed the new charge until Dec. 1, and rates came back down.

Now, experts say lenders may start building the fee into their rates early as October. So, if you want to get one of today's record-low mortgage rates locked while you have a chance, start shopping around ASAP.

Check rates from several lenders to find the best deal available for your area and your credit profile.

Comparison shopping also can help you save money next time your homeowners insurance comes up for renewal. Get multiple rate quotes, and you might find another insurance company offers the same coverage you currently have — but at a much lower price.

About the Author

Doug Whiteman

Doug Whiteman

Editor-in-Chief

Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

You May Also Like

Take a Break From Your Debt This Month

Let debt consolidation give you a break.

If You Owe $25K+ in Student Loans, This Site Could Help You Pay Them Off Faster

If student loan debt is dragging you down, this company can help.

The States With the Best (and Worst) Social Security Checks

See what the typical retiree is paid per year where you live. Hint: It's not much.

4 Steps to Filing a Car Insurance Claim After an Accident

Learn how to make sure your insurance claim is handled promptly.