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Wednesday, May 9, 2001 Mortgage business on the rise Strong market, rate changes among the reasonsBy MONROE
ROARK
As home construction continues to be strong on this side of Atlanta, a couple of facts should be fairly obvious: Tens of thousands of people are arriving, and expected to continue arriving in the next few years, to occupy these homes. Those people will need access to hundreds of millions of dollars to purchase their homes. And while many people are fretting over a first-time home purchase or whether to move up to a bigger house, there are those who are content to simply stay where they are but looking to make their situation a bit more attractively financially. Mortgage experts in Fayette County deal with all of these questions, and more, every day. As famiies make preparations for what is possibly the biggest investment of their lives, these professionals sort through the jungle of numbers to help clients find the most housing bang for the buck. Interest rates are fairly low, and have been for several years. That in itself would seem to make buying a house extremely attractive. But there's a lot more to it than that. Unemployment rates, the economy in general all sorts of factors are considered when mortgage rates are established, according to Martha Fulmer of Mortgage Matters in Fayetteville. A common mistake made by many customers, she said, is assuming that whenever the Federal Reserve lowers its rate, everything else drops as well. That's not always the case, and mortgage rates can occasionally go up a bit, she added. Jackie Pratt of Synovus Mortgage in Peachtree City agrees that many folks make that error. "As soon as anyone see that [Fed reduction] on TV, they think we've lowered our rates. That's a big misconception." Pratt said that one reason for a recent decrease in mortgage rates is a soft labor market and slightly higher unemployment figures. Both Fulmer and Pratt said that they have seen a large increase in refinancing business recently because of rates going down over several years' time. But there is no single refinancing method that works for everyone. If the current rate is 1 1/2 to 2 percent lower that your rate, and if yours is fixed, then refinancing is worth at least looking at, Pratt said. But going through the refinancing process is not free, and customers should remember to include those costs when figuring out how much money will eventually be saved. Otherwise, you're just eating up equity. "If you can pay yourself back in two years, that's good," said Fulmer. "But if you're spending $4,000 in fees to save $100 a month, it's going to take 40 months to see any savings. That's too long." Both mortgage professionals are seeing a lot of customers shorten the length of their loans. Many are switching from 30-year mortgages to 15 years without an increase in monthly payments, Pratt said. Others are going up slightly in house size without their payments going up. "The same payments can be made today on a $230,000 house as on a $200,000 house a year ago," according to Fulmer. Lower rates are also making it attractive for people to get out adjustable rate mortgages and balloon notes, Fulmer added, allowing people to recover from possible financial problems of past years. "A lot of people are combining first and second mortgages and home equity loans into one mortgage," she said.
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