{"id":24697,"date":"2026-04-27T11:49:38","date_gmt":"2026-04-27T11:49:38","guid":{"rendered":"https:\/\/thefundspros.com\/?p=24697"},"modified":"2026-04-27T11:49:38","modified_gmt":"2026-04-27T11:49:38","slug":"nearly-2-7m-homeowners-could-save-with-a-refinance","status":"publish","type":"post","link":"https:\/\/thefundspros.com\/?p=24697","title":{"rendered":"Nearly 2.7M Homeowners Could Save With A Refinance"},"content":{"rendered":"
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Mortgage rates have ticked downward in April, despite the Iran War, a decline that gives nearly 3 million homeowners a chance to lower their monthly payments with a refinance, a Bankrate analysis shows.<\/p>\n

The average 30-year fixed mortgage, the most popular type of home loan, has dropped to 6.34%, down 12 basis points since the beginning of the month, according to the latest Bankrate estimates. Mortgage rates, which are primarily tied to the bond market, have steadily eased off their highs for the year as the U.S. and Iran pursue an end to the conflict and hopefully free up shipping lanes that supply 20% of the world\u2019s oil.\u00a0<\/p>\n

A Bankrate analysis of lending data found about 2.7 million homeowners with a 30-year fixed mortgage could lower their payments by refinancing right now. And for every basis point \u2013 or one-hundredth of a percentage point \u2013 that the current rate drops, roughly 90,000 more homeowners would benefit from a refinance.<\/p>\n

\u201cTwenty-two percent of outstanding mortgages are above 6%, so we know there are a lot of people who are having this conversation right now.\u201d said Joel Berner, senior economist at Realtor.com. \u201cIf you\u2019re in the high sevens, I say absolutely go for it [refinancing] right now.\u201d<\/p>\n

Here\u2019s what you need to know about refinancing in today\u2019s market.<\/p>\n

Refinancing could save homeowners up to $26B over 5 years<\/h2>\n

Mortgage rates sit at the center of housing affordability, determining what borrowers pay each month. With rates around 6 percent, millions of homeowners who locked in loans above 7% have an opportunity to refinance \u2013 potentially unlocking nearly $26 billion in collective savings from lower payments over the next five years, according to Bankrate\u2019s analysis of data from ICE Mortgage Technology, a consulting firm.<\/p>\n

Anyone who could save at least 75 basis points on their rate would lower their monthly payment enough to offset the cost of closing on a home refinance, said Andy Warden, head of mortgage and housing market research at ICE Mortgage Technology.\u00a0<\/p>\n

If rates fall to 6%, a total of 5.3 million homeowners would benefit from refinancing. At 5.88%, that number jumps to 6.3 million homeowners.<\/p>\n

\u201cBecause of where rate distributions sit, as you get down into the 6% and 5.875% range, you\u2019re picking up bigger chunks of refinancers,\u201d Warden said.\u00a0<\/p>\n

Ryan Katherine, a 30-year-old in Salt Lake City, isn\u2019t rushing to refinance the home she owns with her partner. She says she\u2019d need to see her 6.625% mortgage rate drop by at least a full percentage point before refinancing. For her, that threshold is tied to her longer-term goal of eventually renting out the home.\u00a0<\/p>\n

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At 5.625%, Katherine figures her mortgage payment would be about the same as the amount she could charge to rent it out, turning her home into an asset that builds equity at no additional cost.<\/p>\n

\u201cI really just want a simple cut-and-dry rule to follow, and for me, that means waiting until 1%,\u201d Katherine said.\u00a0<\/p>\n

Potential savings from refinancing depend on both the magnitude of the rate cut and the size of the loan. <\/p>\n<\/div>\n<\/div>\n

For example, a $399,600 home loan \u2014 the average refinance application size \u2014 would carry a monthly payment of $2,146 at a 7.09% rate, compared with $1,987 at 6.34%. That\u2019s a difference of nearly $160 per month, or about $1,900 per year.<\/p>\n

That amount of savings could pay off the refinancing costs in as little as three years, depending on how much the bank charges to refinance the loan.\u00a0<\/p>\n

How to decide if a mortgage refinance makes sense for you<\/h2>\n

While a falling rate can be the catalyst, it isn\u2019t the only variable in the refinance equation. You\u2019ll need to weigh your immediate savings against your long-term plans for the home and the upfront cost of the new loan. Ultimately, the math only works if your monthly savings can eventually outrun your closing costs \u2014 a calculation that depends on how long you plan to stay put.<\/p>\n

Here\u2019s how to think through the decision, according to housing experts.<\/p>\n

1. Determine your incentive rate for refinancing<\/h3>\n

The lending industry\u2019s rule of thumb is that refinancing may be worth it if your mortgage rate drops by at least 0.75 to 1 percentage point. But, sometimes, even a smaller rate reduction can make sense if you plan to stay in the home for longer.\u00a0<\/p>\n

On the flip side, a 1 percentage point drop might not be enough if closing costs are high or you expect to move soon. The key is identifying the rate reduction that meaningfully improves your cash flow and moves your longer-term financial goals forward.<\/p>\n

\u201cYou only want to take the step if you are saving enough,\u201d said Kara Ng, senior economist at Zillow. \u201cBasically, the rate has fallen enough, and or you\u2019re staying in the home for a long time. It never hurts to reach out to your loan officer and see how it pencils out.\u201d<\/p>\n

If the math doesn\u2019t check out at today\u2019s rates, don\u2019t immediately cross refinancing off your list. Mortgage rates are constantly fluctuating, so consider keeping an eye on weekly rate moves to identify your best refinance window.<\/p>\n

2. Verify your home equity<\/h3>\n

Your equity position will affect both your eligibility and your rate. Depending on the loan type, you may need 5% to 20% equity to qualify. Borrowers with at least 20% equity typically secure better rates and avoid private mortgage insurance, while those with less may face higher costs or additional requirements.\u00a0<\/p>\n

\u201cIf you bought with less than 20% down a long time ago and your equity has gone up, if you refinance, you could potentially eliminate the mortgage insurance,\u201d Ng said.<\/p>\n

3. Weigh the fees<\/h3>\n

Refinance closing costs typically range from 2% to 6% of the loan amount and may include lender fees, appraisal costs and title insurance. Some lenders advertise \u201cno-closing-cost\u201d refinances, but those often come with a slightly higher interest rate. Make sure you understand what you\u2019re paying upfront and what trade-offs you\u2019re making.\u00a0<\/p>\n

\u201cDon\u2019t just take a look at the mortgage rate they offer,\u201d Ng said. \u201cTake a look at the closing costs.\u201d<\/p>\n

4. Calculate your breakeven point<\/h3>\n

Your breakeven point is how long it takes for your monthly savings to outweigh the upfront costs of refinancing. To find it, divide your total closing costs by your estimated monthly savings. If it would take three years to break even,\u00a0 but you plan to move in two, refinancing likely doesn\u2019t make financial sense. If you\u2019d rather not do the math yourself, our Bankrate mortgage refinance breakeven calculator can walk you through it.\u00a0<\/p>\n

5. Pick your loan type based on your goals<\/h3>\n

You may choose to reset the clock on your 30-year mortgage to lower your monthly payment, shorten your loan term to pay off your home faster or tap into your home equity with a cash-out refinance. Ask yourself when deciding: Do you value paying off your loan sooner, or do you value a lower monthly payment each month? Each option carries different risks and rewards, so align your strategy with your broader financial goals.<\/p>\n

6. Shop around for lenders<\/h3>\n

Mortgage rates and closing fees can vary significantly between lenders, often changing hour by hour. While it\u2019s tempting to stick with your current bank or go with your realtor\u2019s recommendation, getting quotes from at least a few different sources is the only way to ensure you\u2019re getting the best rate.<\/p>\n

Research shows taking the first mortgage offer could cost you thousands over the life of the loan. \u201cA lot of people are only going to one lender,\u201d Ng says. \u201cConsult with at least two or three.\u201d<\/p>\n

In fact, it\u2019s not uncommon to find a full percentage point difference between a lender\u2019s direct quote and the competitive offers available through Bankrate\u2019s marketplace. By casting a wider net, you increase your odds of finding a lender whose pricing best suits your budget.<\/p>\n