Historically low interest rates make this a great time to refinance homes, brokers say

With interest rates at historic lows, now is a great time for homeowners to refinance their mortgages, three Prescott-based brokers said.

Travis Schultz, a Home Mortgage broker said he has been advertising refinances for 30-year mortgages at 3.25 percent interest rates. Rates have dropped about 1 percent over the past year.

With rates so low, almost everyone can afford to refinance their mortgages, Schultz said.

"Depending on the person, on average we are probably saving people $300 to $400 a month," he said.

Broker Jerry Sell of Jerry Sell Mortgage Services concurred, saying homeowners can save significantly on monthly payments. A combination of a drop in sale prices for homes and historically low interest rates makes it a great time to buy a house or refinance one, he said.

However, any decision to refinance depends on a homeowner's specific wants and needs, said Dana Newman, loan specialist/broker at Mile High Lending LLC. She added people benefit even if interest rates drop only a quarter percent.

Newman said a homeowner whose property drops in value might pursue refinancing to seek a lower interest rate. A homeowner might do so to set a new term for a loan, whether it be 10, 15, 20 or 30 years.

A homeowner who is 11 years into a mortgage might seek a refinancing for 15 years, she said.

Newman and Schultz also cited government programs that help homeowners who seek to refinance."Right now there are programs available for people who are struggling with value, for people who are upside down" because their homes dropped in value, Newman said.

One program is the Home Affordable Refinance Program that the federal government rolled out, Schultz said. He said it enables homeowners to refinance without an appraisal.

However, Sell said he has seen mixed results from HARP, such as timeline restrictions. For instance, he said Freddie Mac set a closing deadline of June 1, 2009, for a HARP loan. "The reasons for the HARP loans being created is for those people 'underwater,'" Sell said.

Another advantage is FHA has reduced mortgage insurance rates on streamline refinances, which do not require appraisals, Schultz said.

"We offer no-cost refinances" in which the homeowner is not required to pay closing costs, he said.

"One of the biggest reasons people don't refinance is because they think it is going to cost them thousands and thousands of dollars," Schultz said. Ken Hedler The Daily Courier

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