Nov 13, 2009 5:46 pm US/Central
Amid Housing Crisis, 'Refi' Rates Are Desirable
Current Home Owners Can Benefit From Low Lending Rates
CHICAGO (CBS) ―
Economic recovery? What recovery?
The housing crisis is still causing major problems. Consider: Mortgage applications are at a nine-year low. According to the Mortgage Bankers Association, applications for loans to buy homes fell by almost 12 percent last week.
But there's a side effect that could save you money.
CBS 2'S Vince Gerasole explains.
Many of us fortunate enough to have a home have been sitting on the sidelines, hoping someday rates would drop low enough to make refinancing worth it. A look at the number of Americans taking the "refi" plunge in the past seven days suggests the moment may have arrived.
Mortgage planner Dan Chookaszian is too busy to sit still.
"It's crazy -- I'm getting emails, I'm getting calls, old clients are calling me," he said.
That frenetic pace rings true for every player here in the mortgage game.
Home sales remain stagnant at best, even though rates for a 30-year, fixed mortgage have dropped to 4.75 percent. But those same rates are convincing more Americans with no intention of moving to refinance their current mortgages in search of lower monthly payments.
Those applications have risen by 11 percent in just the past week.
"We haven't seen these rates in the last five to seven years," mortgage planner Justin Lopatin said.
Last year, a $250,000 mortgage at the already low rate of 5.75 percent had a payment of $1,458. At today's rate, the payment drops to $1,304 -- a savings of $154 a month.
Last year, Valerie Landis lost her job and a company car. Now newly employed, refinancing her West Loop condo has helped Landis shave $300 dollars from her monthly mortgage payment.
"It definitely eased a burden," Landis said. "I was definitely feeling a pinch when I knew I had to buy a car."
For brokers working through a difficult housing market, the incoming calls are an answer to their prayers.
"We pray hard and we work hard every day," Chookaszian said.
This is not a return to the housing bubble. There are now stricter requirements for borrowers and lenders. But for those who can qualify, it's a chance to save some money in tough times.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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