Two percentage points. It doesn’t sound like much, but it can translate to thousands of dollars!
Last year, more than 700,000 HARP refinance loans provided relief to homeowners by giving them an average interest-rate reduction of 2 percentage points. The remaining borrowers who refinanced last year reduced their interest rate, on average, by 1.7 percentage points.
A lower interest rate means immediate savings. Let’s put this into perspective with an example: Freddie Mac chief economist Frank Nothaft highlighted that a 1.7 percent interest rate reduction on a $200,000 mortgage can save THOUSANDS of dollars in interest payments the very first year!
He, along with other economists, predicts the real estate market to spike this year. That means, for those with negative equity, possibly getting out from being underwater. But not just underwater homeowners can reap the benefits of refinancing.
Let’s recap. You can: