Millions of homeowners likely are overpaying for their mortgage without realizing it.
Close to 1 in 3 mortgage holders (29 percent) don’t know their mortgage interest rate, or won’t say what it is, according to a Bankrate survey of about 2,200 adults.
The figure is even worse for millennials (ages 18-37). About 37 percent don’t know their mortgage rate, or won’t disclose it. And it’s 35 percent for members of Generation X (ages 38-53).
Not knowing mortgage rates costs you thousands
If you don’t know what your mortgage rate is, you can’t compare it with current rates. And without doing that comparison, you have no way of knowing whether you are in a position to snag a better home loan deal.
That means you could be paying more in interest than necessary every month. Over time, that can amount to tens of thousands of extra dollars.
Also critical is knowing whether you have a fixed-rate mortgage or an adjustable-rate mortgage (ARM).
With an ARM, not knowing your rate is especially risky right now because the federal funds rate is on an upward swing. In March, the Federal Reserve raised its benchmark rate for the sixth time since December 2015, and more hikes are expected this year.
In short, this means that if you have an ARM, your interest rate is liable to rise the next time it’s due to “adjust.”
What to do now
To find out what your mortgage interest rate is and whether it’s fixed or adjustable, Bankrate suggests going through documents, calling your mortgage servicer or logging in to your online account.
Once you know that information, you can use a resource like Money Talks News’ mortgage rate search tool to determine whether you could qualify for a better rate if you were to refinance.
Bankrate senior economic analyst Mark Hamrick explains:
“At issue is whether one should consider refinancing, including into a fixed-rate mortgage, before rates and monthly payments head higher from here.”
Granted, if you have a fixed-rate mortgage, refinancing probably won’t help you get a lower rate.
Mortgage rates hovered at historical lows for years in the wake of the Great Recession, but now appear to be rising steadily. Just in the past four months, the average rate for a 30-year fixed-rate mortgage rose from 3.95 percent to 4.55 percent, according to the Freddie Mac’s latest weekly data.
If you have an ARM, however, you could likely benefit from refinancing to get a fixed-rate mortgage and lock in a relatively low rate while you can.
So, do you know your mortgage rate? Let us know below or on Facebook.