Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 23, 1992 TAG: 9201230071
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: SANDRA BROWN KELLY BUSINESS WRITER
DATELINE: LENGTH: Medium
BANKS BUSY REFINANCING
Home sales have not been strong, but attractive mortgage rates are keeping lenders on the phone with people interested in refinancing old mortgages.The dominant interest rate Wednesday for a 30-year fixed rate loan was about 9 percent.
Brokers said the push to refinance is about as strong as it was in 1986, when homeowners were trying to dump mortgages with interest rates in the mid-teens for rates below 10 percent. However, lenders said they don't expect now the backlog of applications that occurred last time.
In the mid-1980s refinancing flurry, it often took several months from time of application to close on a home mortgage.
"If you wanted to, you could create an incredible backlog," said Mike Hincker of Dominion Bankshares Mortgage. "It's up to every lender to control, by limiting the number of applications."
Hincker said Dominion's appointments are running about two weeks behind the initial contact.
Frank Chrzanowski, who heads Signet Mortgage, said the loan process has been greatly speeded up there because of a new computer system that simplifies the application procedure. He said the system makes it possible for applicants to be qualified in one visit, contingent upon the appraisal of the property.
He said he is taking from five to seven applications daily and making appointments for about a week hence.
Hincker and Chrzanowski both said it's the phone calls that are bogging them down. Hincker said some days he gets more calls than he can take or return before the day ends.
Calls from the curious can take as long as 20 minutes each because of the need to calculate payments and costs, he said.
A lot of it is just phone conversation or consultation, brokers said. Many more people call than actually reach the application stage, said Hincker.
Lenders said they are hearing from people with various age home loans, some as new as last year and at rates as low as 10 percent.
Current rates make refinancing most attractive for three groups of borrowers, lenders said:
People with large loans, meaning the cost of refinancing is a small percentage of the loan.
Borrowers who don't intend to stay in their homes many years and can take advantage of plans that offer a low fixed rate for five or seven years and an option to refinance the remaining balance at the current market rates after that period.
Homeowners who want to trade a 30-year fixed rate for a 15-year mortgage at a lower rate, allowing them to pay about the same amount monthly but save greatly on interest costs over 15 years.