Mortgage refinancing might seem bad, but it could be extremely beneficial to study mortgage refinance facts and statistics in 2022 well and understand what fits you the best.
Since most people get mortgages to pay for the houses they want to own, finding ways to refinance them when the time comes could be essential.
That is why depending on your situation, mortgage refinancing is not something bad. Many mortgages refinance facts and statistics 2022 reports also show us the same thing.
For you to understand and know these facts and statistics, we talked about these mortgage refinance facts and statistics 2022 in this article.
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Mortgage Refinance Facts
1. You technically take out a new mortgage to refinance
Refinancing is not changing your current mortgage’s terms to make it better.
When you refinance your mortgage, you take out a new and possibly bigger mortgage, pay off the other, and pay the rest. That’s how you get better conditions.
2. Mortgage refinance is not only to take advantage of lower interest rates
Many people do mortgage refinancing to take advantage of the lower interest rate they can get compared to their current mortgage.
However, you can also get other benefits. Some mortgage refinances facts and statistics 2022 state that some homeowners refinance to access their equity to pay for expenses.
3. You can be eligible to take out cash for refinancing
Depending on the equity you have on your home, you can take out a bigger loan than your current mortgage and keep the difference.
This is called cash-out refinancing, and it allows you to get the cash equivalent of your current equity in your home.
4. The refinancing process takes approximately the same amount of time as your initial mortgage
When you refinance, the whole process of taking out a mortgage starts again.
The fact that you had a previous mortgage or that you are refinancing the current one does not affect the time for approval. You will go through the same processes all over again.
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5. The length of your loan term will probably change after refinancing
You will have the option to take out a shorter or longer mortgage when you refinance.
If you had a 20-year mortgage, you could take out a 30 or 15-year mortgage. This will make your payments lower or higher.
6. The cost of refinancing is similar to the costs of the initial mortgage
Since you are applying for a mortgage again, the process is the same. The costs you need to pay are around the same.
You will need to expect to pay similar costs to your first mortgage application.
7. Refinancing is not worth it all the time
It might not always be the best idea to refinance even if the new terms are better than your current ones. You must consider your future plans and long-term personal finance goals.
If you are not going to stay in your house for a long time or you want to make big purchases, consider refinancing again.
8. You need to have certain equity to refinance your mortgage
Even though the bare minimum equity you need to own is 5%, this is not the best scenario.
Many mortgages refinance facts and statistics 2022 reports show us that having at least 20% could be the best amount for refinancing.
9. Your lender will check your credit score again when you apply for refinancing
Since you are applying for a new mortgage, you will go under checks again. These checks include your credit score, as well.
Your lender will take a look at your credit score, and if it’s low, you might not be eligible for certain refinancing options.
10. You don’t need to change your lender when you apply for a refinance loan
According to many mortgage refinance facts and statistics 202 reports, you don’t have to change lenders for refinancing.
You could ask your old lender for a mortgage refinancing from them. They will process it, too.
11. The advertised rates are probably not available or require a massive fee upfront for refinancing
You might see some advertised interest rates or other options in the advertisements for mortgages.
These rates are true, but they will most probably require you to pay hefty fees. That is why talk to a lender first to see which options you can opt for.
12. If your income is lower or you are unemployed, you might not be eligible to refinance
When you apply for a mortgage refinancing, if you lost your job or your income drastically decreased, you might not get it.
Since you go under certain checks again to be eligible for a mortgage, an income is part of eligibility for mortgages.
13. You have to pay a discharge fee when refinancing
Your original mortgage lender will charge you a discharge fee when you refinance. This fee is to release your old mortgage and make you eligible for a new one.
It costs around $350, not a massive amount, but it is an extra fee you have to pay on top of other fees.
14. Refinancing could increase your tax burden
Homeowners are eligible for a tax deduction every year on the interest they pay on their mortgages.
You will start paying lower interest rates when you refinance to get a lower interest rate. This means you will be able to write off a lower amount from your taxes.
15. The appraisal is a part of the refinancing process
The lender you go for will need to do an appraisal of your home when you apply for refinancing.
It helps to determine the current value of your home and gives you options for equity and get extra cash if you wish.
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Mortgage Refinance Statistics
1. Mortgage borrowers saved over $2,700 annually by refinancing
The latest mortgage refinances statistics 2022 report shows that in 2021, borrowers saved around $2,700 annually by refinance.
Refinancing amounts increase or decrease depending on the location and the home’s value.
2. 41% of mortgage refinances were to cash out and get extra money
Among all of the mortgage borrowers, 41% of them refinanced their mortgage to get cash out depending on their equity, according to several mortgage refinance statistics 2022 reports.
This means that 41% of all mortgage refinancers got a bigger mortgage to get extra cash.
3. On average, cash-out refinance borrowers got $60,214
Cash-out refinancers received about $60,214 as cash after refinancing their loan in 2021, as we can see in several mortgage refinance facts and statistics 2022 reports.
This means that the new mortgage was at least $60,000 higher than the previous one on average.
4. 36% of non-cash-out refinance borrowers didn’t get any discount points
When you are applying for a mortgage refinancing, you have the opportunity to get discount points.
According to the latest mortgage refinance facts and statistics 2022 report, 36% of refinancers weren’t eligible for any kind of discount point in 2021.
5. There were 1,100,138 refinancings in total in 2018
The last available mortgage refinance facts and statistics 2022 report show us that there were 1,100,138 people got refinancing in 2018.
This is the latest number in terms of how many people got financing, and it is the quarter of total home purchases in 2018.
6. There were $2.6 trillion in refinance originations in 2020
The last available figure about the amount of refinances in a mortgage refinance facts and statistics 2022 report is in the year 2020.
This report shows us that there were about $2.6 trillion in refinance originations in the entire 2020 year.
7. The highest mortgage refinance originations were in 2003
As many mortgage refinance statistics report show, the highest amount of refinance originations were in 2003.
In 2003, there were $3.9 trillion of mortgage refinances. This number is almost double of 2020.
8. There were 10% of repeat refinances in 2020
Repeat refinancing is refinancing a loan more than two times in the last 12 months. In 2020, 10% of all refinances were repeat refinances.
This was primarily due to the low-interest rates because of the COVID-19 pandemic.
9. Refinance borrowers lowered their interest rate by more than 1.25% in 2020
Those who chose to do refinancing in 2020 were able to secure a 1.25% or lower interest rate on average.
The latest mortgage refinances statistics for 2022 show that this is the largest reduction in interest rates since 2015.
10. A quarter of all refinancers shortened their mortgage term
Out of all the refinancers in 2020, a quarter or 25% decided to shorten their mortgage term. This number was at 28% the prior year.
The difference between 30- and 15-year fixed mortgage interest rates was also 0.5%.
11. There was a ten times difference in refinancing between high- and low-income families
We see an increase in the income gap in refinancing. High-income families are refinancing more than before, increasing the gap in the number of low-income families choosing to refinance their mortgages.
About 11% in the high-income level refinanced their loans in 2020, compared to just 2% before 2020.
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Sources
TheBalance, FreddieMac, ShoreFinancial, HomeSweetHomes
Shefali Jain is a Content Editor & Writer at National Planning Cycles.
After completing her graduation in hospitality, Shefali decided to follow her passion and started writing. Shefali has been writing for two years now and contributes to our website as a skilled editor and content writer with strong research skills. Writing product and service reviews, biographies, and book reviews are some of her key areas, among many others in which she specializes.