Many homeowners hoped to refinance their 30-year mortgages when interest rates dropped, but a new report from Neighbors Bank suggests that the savings may not be as significant as expected. Refinancing would need a significant rate cut of at least 0.75% and homeowners may need to hold the refi for several years to break even.

A 15-year refi with a 0.5% rate cut can save buyers over $1,500 in three years, while a 30-year loan under the same terms may leave owners nearly $200 in the hole after the same period. The report also highlights variations in costs and outcomes across the U.S., impacting final savings and breakeven points.

Refinancing can still make sense for homeowners despite financial hurdles, allowing them to access built-in equity through a cash-out refi or lower monthly payments through a loan term extension. However, a 0.6% rate decline is needed to see a net profit, with different variables affecting the breakeven period and average savings.

The 15-year mortgage leads towards profitability, but comes with higher monthly payments. Despite that, it saves more when refinancing from a longer term due to quicker principal paydown. The cost savings between loan periods accelerate over time, with a 15-year refi saving significantly more than a 30-year refi in the long run.

Read more at Yahoo Finance: Why Waiting For Lower Interest Rates May Not Save Homebuyers As Much As They Think