Mortgage rates at historic low

By CRAIG HALL
POTEAU—Even with the economic problems, now is a great time to refinance your mortgage or to purchase a home, according to Jeff Sullivan of Greenstone Financial Services, Inc.

Rates are near an all-time low. People with good credit are able to get a 30-year mortgage for around 4.75 percent and a 15-year mortgage for 4.375. Also, first-time home buyers can qualify for up to $8,000 on the first-time homebuyer program that is supposed to end on December 10.

Jeff Sullivan of Greenstone Financial Services, Inc., looks over a customer's file.

A buyer can qualify for up to 10 percent of the sales price, up to $8,000. Buyers can amend their current tax return or apply it to the next one. He also said it isn’t necessarily a first-time buyer either. If a person has not owned a home in three years, they can qualify for the program, the main requirement being they can’t sell the home for three years.

Sullivan says he does not expect the rates to go up much, either.

“The interest rates were lower five years ago for about six months,” said Sullivan, the owner of Greenstone, located at 2205 Broadway in Poteau. “But they are still at historic lows. The rates are at lows we haven’t seen in forty years. There’s really no reason to be renting if you are credit worthy instead of buying.”

The problem nationwide has had an effect on Sullivan’s business. Three years ago, he could choose between 4,000 lenders. Now, it is down to 400 with the main lenders the big ones such as Chase and Wells-Fargo.

He said part of the problem in the real-estate market dates back to President Clinton’s decision in 1999 when he passed a bill reducing the requirements on servicers such as Fannie Mae.

After the bill passed, borrowers could get a 40-year mortgage and many people bought houses they could not afford and were unable to make the payments.

This led to the boom in people losing their home and the market being flooded with foreclosures. He said it isn’t as prevalent in LeFlore County, but nationwide up to 27 percent of homes are now owned by the lenders.

One thing that has surprised Sullivan is the number of people who have not taken advantage of getting long-term, fixed-rate mortgages.

“I am really shocked that we are not seeing more refinances,” he said. “If somebody is paying say 6.5 percent at a bank, I don’t understand the loyalty and why they would want to deal with an ARM (adjustable rate mortgage).”

Sullivan moved into the business in 1996 and came back to Poteau four years ago. Greenstone offers several different programs for his customers, including FHA, Rural Development and conventional.

The tightening of the credit market has hurt some customers. Sullivan said the lowest interest rate he can arrange financing is a person with a credit score of 580 for Rural Development, but the borrower can not own another home.

If a person’s credit score is 580-620, they can get a home loan, but will have to pay a higher rate than somebody with good credit.

A person can qualify through FHA with a score of 620. But if they try to get a conventional home loan, their score must be at least 680 because if the score is lower, they can’t get mortgage insurance.

Sullivan said the Rural Development loans are the best for people living in this area. They can actually borrow up to 110 percent of the value of the home and use the extra amount to pay the Rural Development fee, prepaid expenses and other fees.

The debt-to-income ratio has also changed for most programs. Now, if a person does not have good credit, their mortgage payment cannot be more than 28 percent of their gross income and the total debt-to-income ratio is 41 percent.

If a person does have a score above 680, the total can increase to 36 percent on the mortgage payment and 50 percent on total debt.

Sullivan’s firm has been very busy, as would be expected with the first-time homebuyer program and the interest rates.

“We’ve been very active,” he said. “People realize they want to get in before December first and they have the tax credit and historic interest rates.”

Unlike other mortgage companies, his customers don’t get caught unprepared. He and his staff process their own loans and send out updates to everybody involved on a daily basis.

He also said the economy will have an effect on interest rates for a while.

“I don’t expect the rates to go up until the economy improves,” he said. “The recession is not over. It won’t be until unemployment goes down below five percent.”

Greenstone offers the ability to apply for a loan over the internet at their web site. For more information, the phone number is (918) 647-3030.

(Published 10-12-2009)