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Area lenders:Equity key in refinace

July 21, 2010 - With interest rates below 5 percent, now could be the time to refinance— if you meet certain guidelines.

This past week, Genisys Credit Union was offering 4.5 percent interest rate on a 30-year fixed rate mortgage with no points and just 4.25 percent on a 15-year.

"If you have the equity in your home, it's time to refinance," said Lon Bone, vice-president of public relations and community involvement for Genisys. "The feds are definitely trying to stimulate home sales and that's why rates are as low as they are."

The problem, however, he says, is that most people are unable to refinance because the value of their home has fallen below what they owe on it.

Still, if your loan is owned by Freddie Mac or Fannie Mae, homeowners can refinance up to 125 percent loan to value, says Eric Dyson, vice-president and residential mortgage manager at Oxford Bank. What this means, he explains, is that if your property is valued at $100,000, you can owe up to $125,000 and still refinance.

"People think that they are too under water; they're assuming their house is not worth refinancing for," Dyson said. "It depends on what area you're in and what your home is worth. Homes $250,000 and less have stabilized much more than homes in excess of $250,000... Anyone should be actively looking if they are currently financed at a 6 percent interest rate or higher."

Dyson suggests calling a lender or realtor to assess the value of their home to see if refinancing is an option. Homeowners can also visit www.freddiemac.com and www.fanniemae.com to find out if they own your mortgage, like they do the majority of 30-year fixed rate loans, even if you write your check to someone else.

While homeowners can check their tax statements and double the state equalized value for an estimate of their home's current value, Dyson notes an appraisal will be more accurate since assessors tend to value homes more than the appraised value in a declining market.

Homeowners who don't have a Fannie Mae or Freddie Mac loan, owe more than their home is valued at, and/or are struggling to make their payments should contact their lender to see what their options are. Under imminent default, some homeowners may qualify for a lower rate based on income guidelines.

Susan covers Brandon Township and Ortonville
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