HARP

About 6.5 million borrowers could likely qualify for and benefit from a traditional refinancing or the HARP program, according to a new report released from the Black Knight Financial Services Inc.

About 3 million borrowers alone could save at least $200 a month via traditional refinances. About 500,000 borrowers stand to save $500 or more per month, the report shows.

"By looking at current interest rates on existing 30-year mortgages and applying broad-based underwriting criteria, we found that approximately 6.1 million borrowers make good candidates for traditional refinancing," says Ben Graboske, senior vice president of Black Knight's data and analytics. "An additional 450,000 meet HARP-eligibility guidelines. All told, in the aggregate we're looking at about $1.5 billion that American home owners could be saving every month through a traditional refinance. Add in the 450,000 HARP-eligible borrowers and that figure swells to about $1.66 billion in savings every month -- almost $20 billion a year."

But refinancing is very rate-sensitive. If rates rise just half a percentage point, 2.6 million borrowers fall out of that population where refinancing would be beneficial, Graboske notes. Borrowers who took advantage of near-record low mortgage rates and refinanced in 2014 were able to unlock big savings in t

heir monthly payments, according to Freddie Mac’s fourth quarter 2014 refinance analysis.

Of the borrowers who refinanced during the fourth quarter of 2014, they were able to reduce their interest rate, on average, by about 1.3 percentage points – a savings of about 23 percent, according to Freddie Mac’s report. On a $200,000 loan that translates into saving of about $2,500 interest during the next 12 months.

Home owners who refinanced through the government’s HARP program during the fourth quarter of 2014 saw an average reduction in their interest rate of 1.6 percentage points, amounting to an average savings of $3,300 in interest during the first 12 months – or about $275 in savings every month.

About 71 percent of those who refinanced their first-lien mortgage maintained about the same loan amount or lowered their principal balance by paying additional money at closing, according to the report.

But 34 percent of refinancers were able to shorten their loan terms, according to the report. Overall, borrowers who refinanced in 2014 saved about $5 billion in interest over the next 12 months.