By Zach Wichter, Bankrate.com (TNS)

Even with mortgage rates jumping since the start of the year, millions of American homeowners can still benefit from a refi. Mortgage data firm Black Knight estimates that roughly 6 million homeowners could save an average of $275 a month by swapping out mortgages.

That total counts homeowners defined by Black Knight as “high-quality refinance candidates.” Those are borrowers with credit scores of 720 or higher, who hold at least 20 percent equity in their homes, are current on their mortgage payments and who stand to shave at least 0.75 of a percentage point from their existing mortgages.

While 5.9 million homeowners may still be in a position to save an aggregate of $1.6 billion each month, Black Knight’s report acknowledges that it’s a significantly smaller pool of good refi candidates, which was near
20 million in 2020.

According to Bankrate.com’s national survey of lenders for Jan. 19, the average rate on a 30-year mortgage was 3.75 percent.

If you have a 30-year mortgage for $250,000 at 4 percent, your monthly payment is $1,194. Drop the rate to 3 percent, and the payment falls to $1,054, a savings of $140 a month. (Beware closing costs, however – they can add thousands of dollars to the price of refinancing.)

Even though they’re higher than they were last year, mortgage rates remain low by historical standards and banks are increasingly eager to help borrowers refi.

What you can do to score the best deal on a mortgage:

Shop around. Closing costs and rates vary by lender, so get three bids.

Understand the break-even point. That’s the moment at which the savings in monthly payments offset the amount of the closing costs. This refinance calculator can help you decide.

Don’t chase the lowest rate. Yes, a low rate and paltry payment are good, but make sure those benefits aren’t overwhelmed by closing costs.

Visit Bankrate online at bankrate.com.