Rates near magic number Homeowners begin to see the value of a new mortgage

A matter of interest

Mortgage companies telling customers of lower rates

Neil Sweren's office was misidentified in an article last week. He is the owner of American Home Loan Inc. in Pikesville.

The Sun regrets the error.

Neal Sweren began to notice it several weeks ago.

"People like to hear the number seven in interest rates. Mid-sevens is where people really start gearing up for refinances," said Sweren, of American Home Mortgage and past president of the Maryland Association of Mortgage Brokers.

Although it may not be like the refinancing boom that swept through in 1993, when 30-year fixed mortgage rates dipped briefly below 6 percent, the steadily and slowly declining interest rates this summer have begun to fuel another round of refinancing.

"Refinancing is starting to come back, especially for the people who bought about two years ago, because most of them are sitting at 8.5, 8.75," said Tom Champion of Ryland Mortgage in Lutherville.

"Now it is starting to be well worth their time when the see this market, and they are starting to see that 1 percent [spread]."

Mortgage companies aren't letting this latest opportunity go by unnoticed, according to Champion; they are telling customers that they should be thinking of refinancing.

Champion said his rate for a 30-year fixed-rate mortgage as of last Thursday was 7.50 percent with no points. A point equals 1 percent of the loan amount.

However, rates in the mid to low 7 percent range can be found, according to Keith Gumbinger, vice president for HSH Associates, a firm that tracks and analyzes mortgage rates.

In fact, this week the Freddie Mac 30-year fixed-rate mortgage was 7.36, the lowest it's been since February 1996.

"Should you think about refinancing right now?" Gumbinger asked. "Yes, if you are one of those people who took out an adjustable rate mortgage a couple of years ago. You're probably finding your interest rate in the mid to low eights someplace. If that doesn't make you terribly happy, you can go out and get yourself a fixed-rate mortgage at 7.5 percent or a little bit below if you want to pay points, or a little bit above if you don't. Certainly, you can trade out of your product and it shouldn't cost you a terrible amount of money."

Gumbinger also said those homeowners who are in a hybrid ARM or ARMs that have a convertible feature that allows them to switch to a fixed rate for a set fee should consider acting now.