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Refinancing possible option for many homeowners

By Sally Voth

While many homeowners might not be able to get a high asking price on their houses, many may be eligible to refinance their mortgage.

Doing so could lower their monthly payments, shorten the term of the mortgage, or both.

"A lot of people are inquiring about refinancing," said Julie Reeves, a mortgage advisor with VBS Mortgage Affiliate of Farmers & Merchants Bank in Woodstock.

Reeves stressed that because each homeowner's situation is unique, it's important to consult with a lending officer.

"In a lot of cases, we're able to, for instance, reduce the term and keep the payment the same, which saves tens of thousands of dollars," she said. "Sometimes I have clients [for whom] I'm able to lower their payment over $300 a month, which is huge."

Reeves recommends that anyone who has a 30-year mortgage fixed at 4.5 percent or higher inquire about refinancing.

"We're at historic low interest rates on mortgages right now, so for those out there that have equity and are in a [good] position as far as their credit history, their income, that sort of thing, now would be a good time to refinance if your rate is, say, 2 percent higher than the going rate right now," Jeff Riggleman, a mortgage originator at United Bank in Winchester, said.

That 2 percent difference is a good rule of thumb because there are closing costs associated with refinancing, he said.

Interest rates early this week were 3.625 percent for 30-year fixed and 20-year fixed, and 2.875 percent for a 15-year fixed rate, Riggleman said.

He handles adjusted-rate mortgages for United Bank. Riggleman said these can vary from ones that are locked for the first three, five or seven years, with the rate not increasing more than 2 percent per adjustment period, and no more than 6 percent for the life of the loan.

Most borrowers are trying to get a fixed-rate loan, though, Riggleman said.

Reeves said homeowners should refinance while they can. She said interest rates are less than half what they were about 15 years ago. In the late 1990s, she said any rate under 9 percent was considered good for the borrower.

That dropped to 6-6.5 percent in the early 2000s, leading to the first refinance boom, she said.

"Then, we just rode the wave from there, but we never, ever dreamed that we would see 30-year fixed rates below 4 percent, which is where they're at," Reeves said.

She advises some of her clients who opt for a 30-year term to make payments as though it's a 15-year one, or what the pre-refinancing payment was "just because you don't know what the future will be."

"It's incredible how quickly you can pay it off," Reeves said.

She suggests that homeowners shop around and get at least two estimates before committing to a refinance plan.

"They should be provided with a detailed estimate showing what [the] interest rate, closing cost and payment would be," Reeves said. "A good loan officer will help you make an informed decision by showing the options that are available to you because for almost every client that comes in here, there are several options."

Riggleman stressed the importance of good credit.

"If you have a bunch of credit cards that are at zero balances and you don't use them, close them out because those continue to be a monthly inquiry on your credit report," he said. "Cut the plate in half, mail it back to the company with a letter and tell them to close it out."

Contact staff writer Sally Voth at 540-465-5137 ext. 164, or svoth@nvdaily.com


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