Cash in on low mortgage rates - good time to refinance

Black Enterprise, May, 1999 by Carolyn M. Brown

B.E. helps you find the best deals around

The interest rate environment continues to be favorable for mortgage borrowers. Thanks to the Fed and low inflation, interest rates have been held down: The average 30-year fixed rate is 6.83%. And there are no signs that such rates will significantly rise or fall in the near term.

This is the best time to refinance. Consider shortening the term of your loan from, say, a 30-year fixed-rate to a 15-year fixed-rate mortgage. Moreover, take advantage of lower rates to ease your burden through debt consolidation--car and installment loans as well as credit cards.

Just how low should rates be for you to consider refinancing? If it's a percentage point or more lower than what you have. Also, you've struck a great deal if you're able to recoup refinance charges within 14 months.

James R. DeBoth, president of Mortgage Market Information Services Inc. (MMIS) in Villa Park, Illinois, says that when shopping for a mortgage you should probably follow the five guidelines below:

* Talk to a real estate agent or broker. Lenders regularly call agents to alert them to new financing arrangements and packages.

* Look for rate surveys published in your local newspaper. Many papers provide brief tables on interest rates and mortgage availability.

* Shop for quotes by telephone. Check out the Yellow Pages under mortgages. Call at least five to 10 different lenders for rates and terms on fixed- and adjustable-rate loans.

* Try computerized mortgage shopping and online services. Many of these services have local lenders on their listings. Two such Internet services, LendingTree (www.lendingtree.com) and MMIS's site (www.interest.com), match online shoppers with banks and finance companies based on their credit history and income.

* Evaluate the annual percentage rate. This figure includes discount points and other charges and spreads over the life of the loan. It indicates the effective rate of interest paid per year.

Since mortgage rates fluctuate, lock in the mortgage rate you are quoted if your closing will take place within 20 to 60 days (common lock-in periods range from 30 to 90 days). Should you opt to float your mortgage rate, be sure to keep tabs on interest rate movement, particularly that of Treasuries. The yields on one-, three- and five-year Treasuries can be good gauges of the introductory rate on adjustable-rate mortgage (ARM) loans.

The Best 30-Year Fixed-Rate Mortgages in the Top Metros

                                                           Down
City               Lender Name                   Rate     Payment

New York           Blue Star Mortgage            6.375%      5%
Los Angeles        Estate Mortgage Corp.         6.375       5
Chicago            LaSalle Home Mortgage Co.     6.25        5
Newark             Chelsea Financial Services    6.375       5
Philadelphia       Trident Mortgage Co.          6.25        5
Detroit            Group One Mortgage Corp.      6.5         5
Washington, D.C.   Crestar Mortgage Corp.        6.5         5
Dallas             Fort Worth Mortgage Corp.     6.63       10
San Francisco      Citibank, FSB                 6.38       20
Houston            Norwest Mortgage Inc.         6.5         5
Miami              Home Financing Center Inc.    6.5         3
Boston             HomeVest Mortgage Co.         6.25        5
Atlanta            Premier Lending               6.375       5
San Diego          Countrywide Home Loans Inc.   6.5         5
Minneapolis        Irwin Mortgage Corp.          6.625       5
St. Louis          Countrywide Home Loans Inc.   6.875       5
Baltimore          Branch Banking & Trust        6.375       5
Pittsburgh         National City Bank            6.25        5
Phoenix            Hart West Financial Inc.      6.75        5
Tampa              Capital Mortgage Systems      6.625       5

City               Points    Telephone

New York             2      516-921-6666
Los Angeles        1.50     714-832-3800
Chicago            2.625    800-510-6895
Newark               2      201-342-6594
Philadelphia         3      610-889-7600
Detroit              2      734-953-4000
Washington, D.C.     2      301-762-2972
Dallas               1      972-233-3722
San Francisco      2.125    510-530-5660
Houston              2      281-679-3500
Miami                2      305-661-4663
Boston               2      617-965-4663
Atlanta              2      770-939-1060
San Diego            2      800-877-5626
Minneapolis          1      612-898-41D0
St. Louis            0      314-379-0270
Baltimore            2      301-596-7880
Pittsburgh          2.75    412-322-8601
Phoenix              0      602-263-1212
Tampa                0      813-261-5119

Source: HSH Associates (www.hsh.com)

Data as of 2/12/99. Rates are subject to change without notice.

The Best One-Year ARMs in the Top Metros

                                                            Down
City               Lender Name                     Rate    Payment

New York           The Mortgage Gallery           4.125%     20%
Los Angeles        American Commerce Mortgage     4.875       5
Chicago            Preferred Mortgage Assocs.     5.125      10
Newark             Magyar Savings Bank            4.625      20
Philadelphia       Beneficial Mutual Savings      3.99       10
Detroit            First Federal of Michigan      4.25        5
Washington, D.C.   Chevy Chase Federal Savings    4.375       5
Dallas             Temple Inland Mortgage Corp.   5.375      10
San Francisco      Union Bank                     5.00        5
Houston            Temple Inland Mortgage Corp.   5.375      10
Miami              Homestead Savings              5.00        5
Boston             Baron Mortgage Corp.           4.75        5
Atlanta            Entrust Home Finance           4.375       5
San Diego          Union Bank                     5.00        5
Minneapolis        Cherokee State Bank            4.875      10
St. Louis          Cornerstone Mortgage Inc.      5.75       10
Baltimore          Charter One Mortgage           4.625      10
Pittsburgh         National City Bank of PA       5.00       10
Phoenix            Deines McCutcheon Co.          5.375      10
Tampa              Capital Mortgage Systems       5.00        5

City               Points    Telephone

New York           1.875    516-873-9200
Los Angeles          1      714-970-9700
Chicago              2      630-241-1266
Newark               1      732-249-2438
Philadelphia         3      215-864-6000
Detroit              2      313-965-1400
Washington, D.C.   1.625    301-652-7060
Dallas               1      972-448-4250
San Francisco        1      415-288-9042
Houston              1      713-895-7199
Miami                0      315-797-1350
Boston               2      800-696-7283
Atlanta              1      770-980-4700
San Diego            1      619-538-3260
Minneapolis          1      651-227-7071
St. Louis            0      314-965-9910
Baltimore          1.875    410-544-6800
Pittsburgh           1      412-322-8601
Phoenix              1      602-482-5060
Tampa                0      813-261-5119