By Susan Shinn
For The Salisbury Post
Even though mortgage rates are not at their historical lows, opportunity still exists for homeowners who would like to refinance.
“The last two years, the mortgage and interest rates just hit bottom and they stayed there for an extra-long period of time,” says Bob Setzer, vice president for mortgage lending at F&M Bank.
Setzer whistles softly when asked to estimate how many customers refinanced.
“I’d say the majority of our customers refinanced,” he says. “We were that busy.”
If you haven’t yet refinanced your home, it’s still a good time.
Setzer notes that interest rates for 15-, 20- and 30-year mortgages are still under 5 percent.
The rule of thumb, he says, is if there’s a 1 percent difference in the rate you’re paying and the current rate, you should be talking with your lender. If there’s a 2 percent difference, he says, “you better just get in and do it.”
The main reason people have held back, he says, is because of appraisals in a market where home values have declined.
“Your loan amount on the value of your home may not allow you to refinance,” Setzer says. “Your equity loan amount may also prevent eligibility.”
However, the Freddie Mac Mortgage Relief Program allows homeowners to refinance without having their home appraised. That program, Setzer says, has been extended, and he’s not aware of any other similar programs in the works.
Often, he says, homeowners can’t qualify if they’re unemployed, laid off or their hours have been cut.
Still, it’s not a bad idea to keep your eye on interest rates, in the event your situation changes.
“Absolutely, there’s still opportunity,” Setzer says.
Terry Whitesell agrees.
“Rates are not as low as they have been right now, as they have over the last two years, but refinancing could still be attractive,” says Whitesell, assistant vice president and mortgage loan officer at Community One Bank.
Whitesell notes that homeowners can refinance, for example, to get cash to buy a car.
“You can roll your car payment into your house payment,” Whitesell says. “The benefit is that the interest you pay on your car will be tax-deductible.”
Whitesell does advise customers, however, to make a car payment every month in addition to the mortgage payment.
“Otherwise,” he says, “you’re going to be paying for that car over 10 to 15 years.”
He notes, “You’ve got equity in the house. You might as well let that equity do something for you.”
If homeowners are still paying over 6 percent interest on their mortgage, there is still opportunity for them to see savings by refinancing, Whitesell says.
Of course, the larger the amount of the loan, the more a homeowner can potentially save, Whitesell says.
“There are a number of scenarios to consider when deciding whether to refinance — do you have equity, what’s the difference in payment, how much are the closing costs, and will you pay off additional debt with the refinance such as credit cards and car payments.”
He adds, “We can run options for people without pulling their credit score. It doesn’t cost anything for people to come in and ask.
“The media likes to make mortgage lenders the scapegoats for the economic problems of the past few years but the loan officers that I know in this area really care about their customers.”
Freelance writer Susan Shinn lives in Salisbury.