Even though mortgage rates were historically low, 78% of homeowners didn’t refinance in 2020
Mortgage rates dropped to historic lows in 2020 and 47% of homeowners who refinanced saved $300 or more per month, yet 78% of homeowners opted not to refinance, according to a new Zillow survey.
Zillow surveyed more than 1,300 homeowners who didn’t move last year to find out their motivations for refinancing or not, and how much they saved if they did.
The homeowners who chose to refinance ranked the process significantly more difficult than training a puppy, but easier than getting a divorce or staying on track with a strict new diet.
We here at Flyhomes rank refinancing much easier than teaching a furry friend how to be a good pupper. (Maybe we’ve just had very good puppies?!) We understand, too, that the process can seem overwhelming. The short story is: you’ve basically done it before! Refinancing is very similar to applying for your initial mortgage, but without the added emotions of being in the middle of buying a home.
Refinancing does take some work. You’ll need to gather financial documents, discuss your options with your lender, and make time to sign with a notary. But if you’re like almost half of homeowners in the Zillow survey who can save at least $300 per month, or $3,600 per year, those tasks may be worth it. Flyhomes Mortgage loan offers typically recommend refinancing when you can save at least 0.25% off of your interest rate with no upfront cost.
Here’s what else the refinancers revealed.
- 89% said low interest rates were a reason they refinanced
- 74% refinanced to reduce monthly expenses
- About one third of refinancers did so to pay off debt
- About 29% of refinancers saved $300-500 per month
- 18% saved more than $500 per month
- 45% saved less than $300 per month
- 8% did not see monthly savings
The homeowners who didn’t refinance shared these reasons.
- 37% were considering moving or paying off their mortgage soon
- 38% said fees were too high
- 29% said they didn’t understand the process
While mortgage rates have risen from their recent low point, they’re still relatively low as of June 2021 and many homeowners can save with refinancing. Many popular loan options such as adjustable rate mortgages and jumbo loans are also becoming more widely available as COVID-19 restrictions have started to ease. And if you’re looking for funding for home improvements or other expenses, the time may be right for a cash-out refinance.