Refinance Math : Homeowners Lowering Payments 25.5%, On Average
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.
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.
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.
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.