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5 Reasons Homeowners are not Taking Advantage of Refi Opportunities

refinance [1]Historically low mortgage rates have been circling the housing market for several years now. Low mortgage rates present opportunities for homeowners to refinance their homes, but recent data and analysis shows that they are not taking advantage of billions of dollars in savings.

Earlier this month, [2] Black Knight Financial Services' (BKFS) Data and Analytics division reported in their Mortgage Monitor Report  [3]that as of November 2015, approximately 5.2 million borrowers could likely both qualify for and benefit from refinancing at today’s interest rates.

Although the number of refinancers may appear to be large, it is actually down from over 7 million in April 2015. Black Knight reports that interest rates were under 3.7 percent during this time, and the 20-year rate was 3.96.

Black Knight Data & Analytics SVP Ben Graboske explained, “This population is diminishing, and as mortgage interest rates rise, it will only continue to shrink further.”

Recent analysis of Black Knight's data by NerdWallet [4] found that the 1 percent rule in the housing market is changing.

Previously, homeowners typically refinanced if they could get a new rate at least 1-2 percent, or 100-200 basis points, lower than their original interest rate. However, many borrowers could still see a lot of savings on their mortgage payment by refinancing at an interest rate difference of 75 basis points, or less than 1 percent, including closing costs.

So why are homeowners so hesitant to refinance in today's low interest rate environment?

NerdWallet found that homeowners run into the following roadblocks when considering refinancing:

Click here  [4]to view NerdWallet's complete study.