Don’t know your mortgage rate? You’re not alone, study finds
Not knowing your mortgage rate can be a costly mistake
If you aren’t sure what your mortgage rate is, you’re not alone.
According to a new study published on Thursday by Bankrate, more than one in four — about 27 percent — of homeowners in the U.S. don’t know the interest rate on their current residence.
That percentage spikes among young homeowners, with about 34 percent of those between the ages of 29 to 39 unsure what their rate is, compared to just 23 percent of individuals between the ages of 56 and 74.
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“It is concerning that more than a quarter of mortgage borrowers don’t know the rate of interest they’re paying on their existing mortgage,” said Mark Hamrick, Bankrate’s senior economic analyst. “Given the decline in mortgage rates we’ve seen over the past year, many qualified homeowners would stand to benefit, or save, by refinancing.”
Not knowing your mortgage rate can be a costly mistake because even the smallest difference can add up to tens of thousands of dollars over time. It’s especially important for those with adjustable mortgage rates, which rise and fall. For instance, a $200,000 mortgage with a 4.70 percent interest rate would cost the homeowner about $119 a month more in interest than the same mortgage with a 4.13 percent rate.
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According to data from mortgage giant Freddie Mac, the average interest rate for a 30-year fixed-rate mortgage fell to 3.45 percent last week, the lowest level since October 2016.
More than 11 million homeowners could save an average of $268 per month on their mortgages if they were to refinance at today’s rates, according to real-estate data firm Black Knight. Refinancing allows borrowers to pay off and replace an existing mortgage with a new loan and refinance rates; it can be used to lower your mortgage rate, reduce monthly payments or switch your loan type.
“With the prospective reduction in monthly payments, the savings could be better put to use, including toward retirement or another worthy financial goal,” Hamrick said. “Here’s where what you don’t know can hurt you, costing you money.”