Around 19 million homeowners could save money on their mortgages by refinancing — but many fail to do so because “they’re not sure it’s worth it,” according to a recent survey.
A YouGov survey for Forbes Advisor found that 34% of survey respondents cited that reason for not refinancing. Forbes believes “borrower burnout” may be behind such reticence:
“As loans get older and borrowers have more exposure to lower rates, (homeowners) are increasingly confronted with chances to refinance. So even though rates are scraping near record lows, those seasoned borrowers don’t want to go through refinancing again.”
Clifford Rossi, an executive-in-residence and professor of the practice at the Robert H. Smith School of Business at the University of Maryland, tells Forbes that many borrowers simply don’t want to endure the paperwork and other hassles surrounding refinancing, even if they would save money.
The coronavirus pandemic is adding to the potential for refinancing headaches. During these tough times, millions of homeowners have asked for mortgage forbearance. This — combined with a large number of new mortgage requests in a red-hot housing market — has put pressure on mortgage lenders struggling to keep up with demand.
The result is that homeowners who try to refinance often face “stalled applications, poor communication between lenders and borrowers, and even misinformation,” according to Forbes.
Homeowners also are reluctant to refinance because they fear paying high fees, a factor cited by 16% of respondents in the survey.
Other reasons why people are reluctant to refinance now include:
- Having already refinanced recently: 23%
- Low credit score: 7%
- Refinancing is too much work: 7%
- Too busy to refinance: 5%
Why you should consider a mortgage refinance
Despite such concerns, a mortgage refinance can be a great deal right now. Mortgage rates continue to hover near all-time lows, so homeowner savings can be substantial.
If you are a homeowner, it’s likely wise to at least shop around to see what is available. To get started, check out our story “6 Tips for Refinancing Your Mortgage During the Pandemic.”
If you decide refinancing is right for you, continue your education process by reading “How to Refinance Your Home Loan.”