The Average Mortgage Refinance Today Could Save Borrowers $304 Per Month

How's that for a nice chunk of savings?

Mortgage rates are extremely low for new home purchases, but those looking to refinance can get in on the action as well. Refinance rates have been trending slightly above purchase mortgage rates, but existing borrowers can still reap savings -- $5.6 billion worth per month, to be precise. In fact, the average mortgage refinance candidate could save $304 a month by refinancing now, according to Black Knight.

When we break that down further, we learn that over 7 million homeowners might shave over $300 a month off of their mortgage costs, while 2.5 million have the potential to save $500 or more. So if you haven't thought about refinancing your mortgage, it could pay to call some lenders and find out what offers you're eligible for.

Does it pay for you to refinance?

When you refinance a mortgage, you swap your existing home loan for a new one. You might get a lower rate that could, in turn, lower your monthly payment. But refinancing isn't the right move for everyone. For refinancing to make sense, you'll need to check these boxes:

• Have a strong credit score. If your score isn't great, you may not qualify for such a competitive rate, which will reduce your savings.
• Have no plans to move anytime soon. There are closing costs associated with refinancing a mortgage, so you'll need to stay in your home long enough to recoup them and come out ahead. Or, to put it another way, if refinancing costs you $3,000 in closing costs but saves you $300 a month, it'll take you 10 months to get back what you've paid. You'll only start enjoying savings once you hit your 11th month under your new mortgage.
• Have a home that will appraise high enough to qualify for a refinance. Today's housing market is very strong on a national level, and home values have risen all over the country. But some homes might have lost value. If your home's value is less than your remaining mortgage balance -- say, for example, because it happens to be located in a particularly depressed market, refinancing may not be an option.

How much can you save by refinancing?

The typical homeowner could save $304 a month by refinancing, but your savings may amount to more or less. Use this mortgage calculator to get a feel for your own circumstances. Let's say you have 20 years left on a $200,000 mortgage with a 4% interest rate. If you're able to lower your mortgage interest rate to 2.85%, which is roughly what a 20-year refinance is averaging now, you'll shave about $117 a month off of your loan payments.

You may be thinking "What happened to my $304 a month in savings?" Again, it depends on your loan amount and the current rate you're paying. That's why it helps to run the numbers.

Refinancing a mortgage today won't make sense for everyone, but it could be a smart move for you. Do some number-crunching to see what your personal savings could amount to. From there, reach out to different refinance lenders to see what rates they can offer. The more quotes you gather, the more likely you'll be to eke out a good deal.