Stanwood is a broker with Houston Capital Mortgage. He says his business has close to tripled in the past few months. Most of the business is refinance money, but he says the low rates have also revived the real estate market.
"It's definitely been a shot in the arm for the sales business, especially for January. Historically, Januarys have been a little bit on the slow side coming out, but just our calls on people that are looking for homes, those calls are up dramatically compared to other Januarys. The interest rates are really getting people's attention."
Lauren Fostel is vice-president of Vault Mortgage Company here in Houston. She says her refinance business out-paces purchase money business by a ratio of about 3-1. She says current homeowners can't resist rates this low, but says there are some guidelines to remember before refinancing.
"If you're at 5.5, then ideally you'd like something 4.5 or low 4's. If you're at 6.5, something in the 5 percent range definitely is appealing. It's going to be based on loan size. Everyone says, you want to at least save 1-percent on interest rate. But, depending on loan size, if you're looking at something that's $400,000, maybe 3/4 of a point will work, but if you're looking at something $100,000, it might take 1.5 or 2 points lower on the interest rate to make sense."
She says the rule of thumb is for homeowners to be able to recover the closing costs from a refinance in 5-7 years. She also says if you just bought a home, you might want to wait a while before you even think about a refinance.
"The one rule that most lenders will stick with, just because they don't want people to continuously refinance, is they would like someone to be in title three to four months on a new loan, so that it will stop the continuous refinance."
Fostel says the time it takes to process a new loan has tripled in some cases, mostly because of new mortgage requirements. Strict rules on income, assets and job history have made the process a bit more complicated, but she says the news rules mean fewer people will lose their homes in the future.