Refinance fever heating up Springfield market

by Ruth Scott

SBJ Contributing Writer

Consumer optimism is high when it comes to purchasing and refinancing homes, according to local financiers.

"With interest rates declining, there are a lot of people who are trying to take advantage of the situation," said Todd Parnell, president of The Bank.

According to Parnell, the trend in Springfield, as in the rest of the nation, is toward purchasing and refinancing homes. "There is a lot of economic activity here in Springfield," he said. "A lot of homes are being built. There is a lot of optimism about being able to afford a home."

"The fixed rates available right now are the equivalent of rates in the 1969-1970 era," said Larry Cruzan, mortgage lender at Guaranty Federal Savings Bank. "It's kind of unusual. It's a good time to take advantage of these rates if you are borrowing money."

Tommy Ridenhour of Carl I. Brown & Company, a division of F. T. Mortgage Companies, said that in the last 45 days, volume has been abnormally high. "In January we had $19 million in loan applications, including purchases and refinances," he said. "That's over three times the normal monthly volume."

Why are interest rates so low? According to Cruzan, "Money, or cash, is one of the real followers of the supply-demand economy. With all the turmoil going on in the world, if you had excess dollars you'd probably want to invest in the United States."

Cruzan said that a lot of money is invested in bonds and government securities. These are sold at auctions, so when more are available, it drives down the price.

"A lot of money is out there," he said. "Demand isn't keeping up with supply, so we're getting lower interest rates."

"I don't think we've seen the bottom of these rates," Ridenhour said. "I think the interest rates will continue to fall. The Federal Reserve announced a week ago that they are going to maintain a neutral position, so the market will dictate the rate movement."

According to Parnell, in order to qualify for refinancing a person must meet certain requirements regarding the amount of their debt related to their income.

He also said it is very important to have a clean credit record and not have too much credit card debt.

To refinance a home, Parnell said, "you have an existing loan and decide you can improve your monthly payment by going through the process. That process is pretty standard, and could take between two weeks and 60 days. You can lock into a fixed rate for up to 30 years. It can save you a lot of money if you take the time to do it."

Ridenhour said that a customer interested in refinancing needs to "sit down and analyze what you have, and determine what would be the best program to meet your needs."

After that, he said, the person could go through the process to establish that program.

"No one knows for sure how long this situation will occur," Parnell said. "It's certainly in everybody's interest to sit down and compare what they're paying and what they could be paying, to see if it's worth the time and effort to refinance."

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