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Posted 11/17/2012

Refinance Math : Homeowners Lowering Payments 25.5%, On Average

Refinancing homeowners saving 25% on average

Refinancing homeowners saving 25% on averageFor homeowners in search of low mortgage rates, last quarter marked a terrific time to do a home refinance.

According to mortgage-backer Freddie Mac, U.S. homeowners who refinanced between July-September 2012 lowered their mortgage rates by an average of 31 percent.

It's the biggest one-quarter improvement in 27 years.

Click to see today's rates (Aug 28th, 2016).

Mortgage Rates Make New Quarterly Lows

The average 30-year fixed rate mortgage rate averaged 3.54% last quarter, according to Freddie Mac.

The mortgage rate marks its the lowest quarterly average in the agency's 41-year history and, when considered against two other Freddie Mac facts --  the average refinanced mortgage rate was 5.25 percent, and had a median life of 5.6 years -- it's clear that U.S. homeowners are saving a metric-ton of money.

Consider a homeowner in the Philadelphia, Pennsylvania suburb of Gladwyne who, 5.6 years ago, borrowed from the bank at the local jumbo loan limit of $417,000. Today, he would save $586 per month.

  • March 2007, at the date of purchase : Mortgage payment of $2,303
  • September 2012, after a non-cash out refinance : Mortgage payment of $1,717

That's a 25.5 percent mortgage payment reduction, on average, and the math works at all loan sizes.

Click to see today's rates (Aug 28th, 2016).

HARP Refinancing : Mortgage Rates Drop 2%

For homeowners with underwater mortgages, Freddie Mac reports even larger monthly refinance savings.

Homeowners refinancing via the Home Affordable Refinance Program (HARP) refinance dropped mortgage rates 200 basis points on average, or 2 full percentage points. For the same borrower shown above, it's a 29% payment decrease.

HARP is available to homeowners with mortgages for which the note date is no later than May 31, 2009, and with a perfect mortgage payment history stretching back 6 months.

Click here to read more about HARP.

Refinance To Today's Low Mortgage Rates

Mortgage rates remain low, propelling the U.S. Refinance Boom through its 4th year. Many U.S. households have refinanced at least once; some have refinanced three or four times using zero-closing products.

To see what today's low rates can do for you, and whether a zero-closing cost refinance is right for you, get started with a rate quote online.

Click to see today's rates (Aug 28th, 2016).

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)