Homeowners are looking to refinance their mortgages. Should you?

With mortgage rates at the lowest levels in more than a year and a half, more existing homeowners are looking to cut their existing mortgage payments, and for many it might be time.

The Mortgage Bankers Association reports applications to refinance a mortgage last week were up almost 33% from a year ago. And refinancing last week accounted for 42% of all mortgage applications and 44% of mortgage application dollar volume.

“Some borrowers, particularly those with larger loans, jumped at the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April,” said MBA Chief Economist Mike Fratantoni.

“Additionally, refinances for FHA and VA loans jumped by 11% (last week).”

There are now 5.9 million existing homeowners who could see their rate cut by at least 0.75 percentage points by refinancing, according to mortgage software compny Black Knight, 2 million more than just a month ago.

The savings for those homeowners refinancing would average $271 a month, Black Knight said.

If mortgage rates dropped just another one-quarter of a point, close to 7 million borrowers would benefit from refinancing.

If you do refinance, shop around for the lender.

LendingTree reports mortgage origination fees averaged $2,059 in the first quarter, but 8% of refinance borrowers were offered $0 in fees and 35% of refinance borrowers paid less than $1,000 in fees.

Low rates appear to be more attractive to existing homeowners right now than buyers. The Mortgage Bankers Association reports applications for a mortgage to purchase a home fell 2% last week, with rising home prices offsetting lower borrowing costs for many potential buyers.

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