Low rates spark interest in refinancing

Low home mortgage interest rates are attracting the attention of valley residents who may want to refinance, but tighter credit application requirements will prevent many of them from taking the leap.

The average national rate for a 30-year fixed-rate mortgage fell to 4.49 percent last week, which qualifies it as the lowest on record since mortgage buyer Freddie Mac began tracking rates in 1971. Rates on a 15-year fixed mortgage dropped to 3.95 percent.

A year ago, rates were coming in at about 6.5 percent, said Pamela Hewitt, senior loan officer for Castle and Cooke Mortgage.

Hewitt said the low rates are tempting to homeowners who are interested in refinancing their mortgages, and her phone has been ringing with inquiries.

"The rates are the lowest they've ever been," Hewitt said. "It's a good time to take advantage of it."

The rates have been dipping consistently, but the 4.49 percent rate surprised Hewitt.

"We weren't expecting them to go quite this low," she said.

Brad Beal, president and chief executive officer of Nevada Federal Credit Union, said his institution hasn't seen an influx of people coming in to refinance, but a few have called to inquire about the process.

In recent weeks, though, Beal has seen people who have owned their homes for long periods of time come in to refinance. He said this is because of the low interest rates.

"Unfortunately most folks don't have any equity in their homes," he said.

Factors that would prevent people from being able to refinance include how much of a rate reduction they'd receive, the cost to refinance and how long they've lived in their homes. If you plan to stay in your house long enough to recoup costs associated with refinancing, then Beal said it's worth it.

Las Vegas resident Heidi Avila is refinancing her home because the dropping rates appealed to her. She said even if her monthly mortgage payment only is lowered by $40, the extra cash in her pocket will be useful.

"That's a tank of gas," she said. "And I need the money."

With people struggling financially throughout the valley, industry professionals are predicting that those who are able to refinance will take advantage of the lower rates.

"We've definitely seen an increase in new refinance open orders within our company," said Debra Yolum-Runyan, vice president of Fidelity National Title.

Yolum-Runyan said that Fidelity's national office indicated that the increase in refinance orders probably will continue through August, but taper off afterward.

"We actually saw an increase in mid-July," she said.

Cynthia Luna, a Las Vegas real estate agent, purchased her home about two years ago at a rate of 5.5 percent. At the time, she thought it was a great rate.

"Two years ago they were saying, 'This is rock bottom,'" Luna said.

When Luna saw her real estate clients receiving the new lower mortgage loan rates she wanted in on the action. At the end of June she initiated a streamlined Federal Housing Administration loan, and is saving a substantial amount of money for her efforts.

"We're basically saving $200 a month," Luna said.

Before refinancing, Luna's house payment was $1,592. Although she has yet to make a payment on her refinanced loan, she expects that figure to drop to about $1,325.

"Overall, there was nothing to it," Luna said. "If you have the funds it's worth it."

Eileen Bechtol, senior vice president of Nevada Title Co., said she has seen an "ebb and flow" of people wanting to refinance.

"It's not a strong, steady increase or anything," she said. "It's still hard to get approved for funding."

Bechtol said that unless credit standards are relaxed soon, she doesn't foresee a measurable increase in refinances.

"I don't think we'll see what we would have seen in a better economy," Bechtol said. "Not everybody can take advantage of the rates."

Contact reporter Laura Emerson at lemerson@viewnews.com or 380-4588.