Mortgage rates lure
increased businessHome refinancing leaps
60 percent in the past
year, a review finds
With mortgage rates plunging to unprecedented lows, a snapshot of refinancing activity at nine of the state's largest lenders shows a jump of more than 60 percent in the past year, says Mike Imanaka, vice president of marketing for Title Guaranty of Hawaii.
The state's largest title and escrow firm, which processes the majority of mortgage settlements statewide, has been tracking the explosion in mortgage activity.
In April 2002, the nine lenders processed a total of 1,481 refinanced mortgages worth $342 million, Title Guaranty found. By April 2003, that number had grown by 62 percent to 2,399 refinanced mortgages worth $551 million.
Lenders themselves admit that just getting them on the phone can be a challenge now.
At Bank of Hawaii, the explosion in activity has everyone in the mortgage department working overtime, said Carl Cunningham, senior vice president for mortgage banking sales.
In April alone, the bank processed more than $190 million in mortgages, he said. And the bank's mortgage refinancing business has quadrupled from May 2002 to April 2003, according to Cunningham.
"In my 20 years of experience I've never seen the level of interest and the volumes of people who refinanced even 120 days ago and now want to come back again," he said.
Even though the department has created more efficient processing systems to move loans along at a faster pace, it's still hard to keep up with the constant demand, Cunningham said.
"It's taking longer to get appraisals and return calls, so what people used to be able to do as a service standard and what a client expects have certainly changed now," he said.
While interest is high, most homeowners don't have time to become experts on the finer points of mortgage refinancing. But there are some basic tips available online for demystifying the onslaught of details and documents related to the mortgage process.
For openers, look at www.wellsfargo.com/mortgage and use the drop-down menu under "Tips and Tools" to select Home Loan Workbench.
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Among the questions and tips offered:Question: What is the difference between the interest rate and annual percentage rate, or APR?
Answer: The interest rate is the cost to borrow the lender's money. The APR represents the total cost of the mortgage over the life of the loan, including interest, lender's fees, mortgage insurance and points.
Q: What does it mean to buy down the interest rate?
A: Buying down your interest rate is usually done by paying points to the lender. One point is equal to 1 percent of the total mortgage amount. A lender may allow you to pay a certain amount of points when you close your mortgage in exchange for a lower interest rate.
Q: How are rates determined?
A: Rates are determined by the stock and bond market and other financial indicators. Rates generally change daily and can change several times a day in volatile markets.
Q: How can I compare rates and fees when shopping for a mortgage?
A: The APR is intended to enable you to compare terms of loan products from different lenders. When comparison shopping, look at the APR and choose the terms most favorable to you.
To comparison-shop Hawaii rates, visit the Honolulu Board of Realtors Web site at www.hicentral.com and click on "Current Mortgage Rates."
And a visit to www.national.com.au will let you download a seven-page guide that describes the process of using a mortgage broker, negotiating your loan, and choosing the right mortgage. Go to the site and search via the words: "understanding the mortgage market" to get access to the guide.
The Sacramento Bee contributed to this report.