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A person playing pin-the-%-on-the-house but missing the mark.
A person playing pin-the-%-on-the-house but missing the mark.
Kiersten Essenpreis for Money

While the homeownership gap between Black and white families is well-known, the disparities in refinancing are less talked about.

Record low mortgage rates have spurred a massive home buying and refinancing boom. More than 8 million homeowners refinanced their mortgages last year, according to data analytics provider Black Knight, saving thousands of dollars.

But not everyone is able to take advantage.

Between April 2020 and January 2021, less than a quarter of Black homeowners who could have saved $200 or more per month by refinancing completed the process or sold their homes. Meanwhile, almost 40% of white borrowers eligible for the same savings did so, according to mortgage-purchaser Freddie Mac.

Refinancing at low interest rates can be transformative for a homeowner's monthly budget and can create massive savings over the life of a loan. So, what’s holding back Black refinance numbers?

Black and Hispanic borrowers could benefit hugely from refinancing

From 2005 to 2015 Black and Latino borrowers paid mortgage interest rates of 0.4 percentage points more than white homeowners. A main reason for that was that they didn’t refinance as often — a seemingly small mistake that has long-term financial consequences.