More people are refinancing their homes instead of searching for a new home by nearly a 2 to 1 margin, a LendingTree survey revealed Monday.
Nearly 60% of homeowners surveyed refinanced an existing mortgage while a third obtaining a purchase mortgage. Those who refinanced shaved an average 2% off their mortgages, resulting in thousands of dollars saved over the mortgage term.
"The long-term benefits of shorter term mortgages are substantial, but you need to identify your financial priorities. Depending on your current rate, you may be able to reduce your mortgage term, build more equity and pay off your mortgage in half the time with very little impact to your monthly mortgage payment," said Doug Lebda, chairman and CEO of LendingTree.
Of those who refinanced, 62% decided to keep the same term as their original loan, while 27% shortened the term of their mortgage. "The current record low interest rates present a unique opportunity for homeowners to shorten their mortgage terms and save hundreds, maybe thousands of dollars over the course of their mortgage, given they can qualify for a refinance and can afford a higher monthly payment," said Lebda.
Click on the chart below to see the interest rate savings of refinancing into shorter term mortgages.