Homeowners reduced or maintain mortgage debt in fourth quarter
Posted on Monday, February 6, 2012 at 8:54:41 AM
In the fourth quarter of last year, 85 percent of homeowners who refinanced their mortgage either reduced their principle balance by paying-in additional money or kept the same loan amount. Historically-low mortgage rates had many homeowners going over home mortgage comparison charts to research how much refinancing may save them.
"The typical borrower who refinanced reduced (his or her) interest rate by about 1.4 percentage points," Frank Nothaft, Freddie Mac vice president and chief economist said. "On a $200,000 loan, that translates into saving $2,700 in interest during the next 12 months."
This is was the highest number of "cash-in" borrowers in the past 26 report analysis. A cash-in borrower increases his or her loan balance by 5 percent.
"Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 60 years to lock in interest savings. Fixed-rate mortgage rates hit new lows during December, with 30-year product averaging 3.96 percent and 15-year averaging 3.25 percent that month, according to our Primary Mortgage Market Survey," Nothaft said.
Homeowners should consider refinancing as a potential option to decrease their monthly mortgage costs and give their savings a bit more padding.