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Even as some mortgage refi rates are under 3%, these 3 things holding homeowners back from refinancing 

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Mortgage refinance rates are extremely low right now (you can compare today’s best refi rates here), and experts say now is a great time for many of us to refinance to potentially save thousands. “Mortgage rates are at levels that were unseen prior to this time last year, so if you haven’t refinanced, you’re missing out on the lowest rate you’ll ever have on a mortgage,” says Bankrate’s chief financial analyst Greg McBride. This is because rates are only likely to increase in the coming years, he predicts. (Find the best mortgage refinance rates in your area here.)

Despite the low rates, 78% of homeowners passed up refinancing last year, according to data released by Zillow in June. Some of them, of course, are right to do so: If you’re not going to save half to three-fourths of a percent on your rate or plan to move soon, a refinance generally isn’t right for you, experts say. But for others, that decision could cost them: The survey found that roughly half of those who refinanced in the past year saved $300 or more per month. Here’s what’s holding people back.

You don’t understand the process of refinancing a mortgage

Refinancing isn’t simple: It requires you to shop around for the best rate (find the best mortgage refinance rates in your area here) and to submit a lot of paperwork like paystubs, tax returns, a statement of assets and debts and bank statements. So it’s no surprise that 29% of homeowners in the Zillow survey said they did not refinance because they did not understand the process. “Maybe the person has a comfort zone for financial decisions and this isn’t one of them,” says certified financial planner and financial therapist Tara Unverzagt of South Bay Financial Partners in Southern California.

That said, if you’re confused about the ins and outs of refinancing, this guide will walk you through what you need to know. And Jonathan Lee, senior director of mortgage sales for Zillow Home Loans, says in general, refinancing a mortgage should be quicker and easier to complete than when taking out the initial loan: “It really all starts with the borrower taking the time to understand their own goals and needs, and then shopping around to find a lender they feel comfortable with,” says Lee.

You believe the fees and costs of refinancing are too high (and sometimes, they are)

Zillow’s survey revealed that 38% of respondents indicated that the fees associated with refinancing were too high. “Refinancing isn’t free and it will take a year or more to earn back those costs of refinancing. If you don’t plan on being in the home more than a couple years or you have a modest loan balance, then the interest savings may not be enough to make it worth your while, but those are pretty isolated instances,” says McBride. Plus, “the ability to often roll your costs into the loan means you can reduce your payment in a meaningful way without any out-of-pocket expense,” says McBride. 

You’re overwhelmed as it is

“Our brains only have so much bandwidth and we’re overloaded already, we’re not going to want to take time to do something as time consuming as refinancing,” says Unverzagt. If that feels spot-on for you, but you’re kicking yourself for missing out on savings, McBride offers another way to think about the issue: “If you knew you’d have to devote five hours to a task over the next three weeks but that it would save you $10,000 in the next handful of years, you’d do it wouldn’t you?” That’s the opportunity that currently exists with refinancing. (Find the best mortgage refinance rates in your area here.)

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