According to the Mortgage Bankers Association, 30-year fixed-rate mortgages hit their lowest since they began tracking this information in June 2003. As a result, application volume increased 50 percent for the week ending Dec. 18, compared to the previous week, and up a whopping 124 percent compared to the same week one year ago.
Matt Wood, branch manager with 1st Alliance Mortgage in Belton, said they were very busy processing applications after rates took a significant dip.
“They dropped drastically last week. It’s pretty safe to say it’s in the 5s (between 5 and 6 percent),” Wood said.
People looking to refinance comprise a large segment of the applications - 83 percent, says the Mortgage Bankers Association. Refinance applications are streaming into local mortgage bankers also.
Homeowners with large loan balances can save more on their monthly payment than folks with small mortgages. For example, a one percentage point drop (from 6 to 5) on a $200,000 loan could save the borrower $2,000 per year, Wood said. For smaller loan balances, around $50,000-$60,000, it may not be worth the fees and closing costs, which vary depending on the loan type. However, these fees in some cases can be rolled into the loan balance, which means applicants could refinance with little cash out of hand.
Wood says these low interest rates should prompt homeowners into checking out what rate they can get and how much they can save.
Even if they don’t act, it’s important to know where you stand.
These low rates are the result of the Federal Reserve buying billions of troubled mortgage bonds, which frees up money for new loans.
Caren Hildinger, a certified mortgage planning specialist at Castle & Cooke Mortgage in Temple, said, “Yes, you are absolutely correct . . . rates are low. I think many folks are sitting on the fence because they have heard rates will get lower and the natural inclination is to want to wait for that to happen.”
Mortgage bankers say rates vary daily, and sometimes hourly. It’s best to get qualified beforehand, have your ducks in a row, so when the type loan you’re suited for dips, you can lock it in.
Michael Thompson, Extraco Bank president in Temple, said they have money to lend and are actively seeking borrowers. Extraco loans for some clients actually stay right here in Temple, Thompson said.
“By and large, we’re virtually at all-time lows, and it’s a great time to buy a house,” Thompson said. “And there is plenty of money available from community banks that didn’t make all those sub-prime loans. ”
Another opportunity for refinancing is available by checking with your present mortgage company. Some of these companies would rather refinance at a lower rate than lose your business.
