What not refinancing can cost a member?

The other day the Wall Street Journal published an interesting article entitled “The Steep Cost of Not Refinancing.” There’s lots of memberlicious nuggets here to take away. The entire article can be found here.

The premise of the article is that by not refinancing a mortgage loan when interest rates drop can cost a home owner tens of thousands of dollars in savings over the life of the loan.

The article quotes a paper published by the National Bureau of Economic Research that states as of the end of 2010 nearly one in five American homeowners had not taken advantage of lower interest rates. And it states that the present day dollars a member foregoes is about $11,000. That’s a lot of money!

Since then, I’m sure many have as rates were entering a low point at that time, but let’s assume that there’s still 20% of Americans who haven’t refinanced. What could that mean for Credit Unions wanting to be memberlicious?

Well, let’s say we have a 10,000 member Credit Union. We know that about 60% of Americans are homeowners so in our pretend example, we’ve got 6,000 who own their home. Translate the 20% who didn’t refinance and you’ve got 1,200 members or 12% of the membership who could benefit from a Credit Union low cost refinance.

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