Mortgage rates are very low, so it must be time to refinance your home, right? While that will be the case for some borrowers, local lenders are taking a cautious stance.
“When you quote a rate, everybody wants the lowest rate, but it depends on the purpose of the loan, the occupancy of the property, is it a single family, is it a condo, is it a manufactured home, what’s your credit score, what’s your down payment … There are about 16 criteria just to quote a rate,” said Linda McKinley, branch manager of Fairway Independent Mortgage Corp. in Glenwood Springs.
“The profile of the buyer determines what rate they’re getting. Credit score is a big factor,” as are how the loan compares to the value of the property and what the borrower’s debt-to-income ratio is, said Mike Picore, area sales manager for Bay Equity Home Loans in Glenwood Springs.
“If you have a low credit score with low money down and high debt ratios you might not fall into that perfect category,” he said.
“It’s hard to say one size fits all and everybody should go out and refinance, because there are so many variables,” said Ian Bays, Alpine Bank regional president based in Carbondale.
Where are rates going?
“Rates are at historical lows right now,” Picore said. Borrowers may wonder if this is a short-term window or a longer trend.
“If any of us had that crystal ball we’d probably be in a different line of business. … We just don’t know, things change so quickly now as we’ve seen with COVID,” Bays said.
Picore, however, is confident that rates will stay low in the near future. “Rates should stay low, because the government is trying to keep mortgage rates down because it’s the fastest way to get the economy back on its feet,” Picore said.
McKinley has a particularly optimistic outlook on mortgage rates. “Rates are pretty low, and they’re most likely going to go lower. That’s my feeling based on webinars, meetings, the articles I’ve read — the rates are continuing to trend down. … Everybody is scared they’re going to miss out on them, and that’s not going to happen,” she said.
The low rates have kept local lenders’ hands full. “We’ve been extremely busy,” Picore said.
“We’re probably at least double where we were last year at this time,” McKinley said. She pointed out that appraisers are also very busy. “There’s so much volume, and the appraisers in our valley can only handle so much,” she said.
Advice from the professionals
Local lenders agree it’s worth looking into refinancing with rates as low as they are.
“Rates are extremely low, and it is a great opportunity for a lot of people. … Each individual really needs to take stock of where they’re at, what their income looks like, what their debt load looks like and talk to somebody who’s knowledgable in the area and can help them navigate that,” Bays said.
“Any time you hear that rates are at all-time lows you should definitely check with your bank and mortgage lender and see what opportunities are out there, because there are a lot of programs and a lot things that your local bank or lender could possibly look into that could save you a lot of money,” Picore said.
McKinley pointed out that when considering refinancing, low rates aren’t the most important thing.
“Get all your ducks in a row, determine how long you’re going to be in the house, determine if your income’s going to continue, where it’s been, look at all of your debt, not just the mortgage, then meet with a professional to review all of your options. Don’t just chase that lower rate, because the lowest rate on the wrong product or on the wrong structure will cost you more than a higher rate,” she said.