In all the media doom and gloom, (which of course sells papers and viewership for news programs) one can look closely and see there is positive impact out there – interest rates as low as 4.675% – for someone willing to pay a one per cent loan origination fee.

    “Rates have not been that low in at least six years” said Lance Dickson, Senior Vice-President of Nova Home Loans in Tucson.  People not desiring to pay a loan origination fee for a 30 year fixed mortgage can obtain a mortgage for about 5%. 

     Jerry Sundt of President of Sundt Mortgage in Tucson is offering the same low rates for people with good credit scores.  Twenty per cent down is required for an 80-20 Loan to Value.  For every $100,000 in purchase price, the borrower needs to put down $20,000 for a 20% equity stake. 

     This  is an ideal time to refinance a higher rate mortgage if you have at least 20% equity in your home.  Many people are now in 6 1/2 % or 6.75%  mortgages.  We’re looking at good credit scores of about 740.  But rates are much lower for people with lower credit scores too!

     To understand how interest impacts payment, $100,000

               at 6.75% for 30 years, the cost is $648.60; 

              at 6 .25%, for 30 years, the cost is $632.07;

              at 5%, the cost is $536.82; and

              at 4.675% the cost is:  $517.14. 

    If you are thinking about selling your home within a year or two, refinancing may not pay.  You, your lender, and/or your Realtor, should do a break even analysis to determine if a lower rate will save you money. Calculate the closing costs including the loan origination fee to determine whether this works for you. 

    The media does not emphasize that people who have been in their homes prior to 2004 and have not refinanced to the hilt, should have some solid equity in their homes. 

   A previous blog dated July 28, 2008 and titled “Bring on the Numbers” traces the increase in home pricing in Tucson from 1993 through 2007.  With a 45% increase in three years between 2005 to 2007, the lamented decrease in home value of about 25% still leaves the homeowner who bought in  2004 or before, with at least a 20% increase in equity.  The only article I’ve seen about this phenomena was written by Kenneth Harney who is “right on” in his analysis.

    With more than 600 homes in Tucson on the market for $120,000 or less, now is the time to “sieze the day!”    A gander at the blog yesterday which shows all the active listings and the breakdown by both zip code and price range combined with the lowest interest rates in years will get savy people moving. 

    It is a well known fact that by the time the media says we are pulling out of the doledrums, prices have already moved up — and when that happens, interest rates will move up too!  The media uses lagging indicators!

    So to the savy out there, Carpe Diem!

 Resources:

Ken Harney Articles:  http://realtytimes.com/rtpages/kennethharney.htm

Lance Dickson -Senior Vice President – Nova Home Loans:  http://www.lancedickson.com/

Jerry Sundt – President – Sundt Mortgage http://www.sundtmortgage.com/

Tucson Realtor:  Terry Bishop   http://www.terrybishop.com