Low interest rates are encouraging mortgage activity

By: Nico Rubello | C&G Newspapers | Published September 26, 2012

Metro Detroit mortgage lenders say mortgage activity is on the rise this year due in large part to historically low interest rates.

That’s because, with interest rates hovering in the 3 percent to 4 percent range, the number of mortgage transactions is going up as more people look into refinancing their mortgages.

“The trend in (mortgage rates) is the lowest I’ve seen in 20 years in business,” said Mason Miller, vice president of First National Mortgage Bankers in Auburn Hills. “It’s the savings factor.”

Records from Macomb, Oakland and Wayne counties show that there were 72,122 mortgage recordings reported in those counties during the first seven months of 2012 — up 61.7 percent from the same time period in 2011, said Steve Bartley, owner of Advertising that Works.

In just April through July, there was an increase of 93.5 percent this year over last, Advertising that Works reported.

“This summer has been far busier than last summer,” said Jeff Marsack, mortgage loan officer for Great Lakes Mortgage Funding in Sterling Heights.

In fact, Great Lakes Mortgage Funding closed more mortgages this August than during any other month in the company’s 12-year history, added Marsack, who specializes in new purchase mortgages.

Like refinanced mortgages, new purchase mortgages have also been affected by historically low rates, though to a lesser extent.

With the prolongation of low home prices and an improvement in the overall economic climate, home sales — and in turn new purchase mortgage applications — have continued upward this year. “The opportunity to get into a nice home at an extremely low rate is there,” Miller said.

A single month-to-month comparison between the months of August 2011 and August 2012 showed the number of home sales in the metro Detroit region — Macomb, Oakland, Wayne and Livingston counties — rose 11 percent, according to a report from Realcomp II Ltd.

During the same time, median sale prices rose 8.8 percent, to $87,000, across the four-county region.

With changes to federal programs, data also indicates that servicers have continued to emphasize alternatives to foreclosure during the first three months of 2012, according to the most recent data from the Mortgage Metrics Report put out by the U.S. Office of the Comptroller of the Currency.

Aside from traditional mortgages, there were 2,569 non-traditional loan modifications reported in Michigan during the first three months of 2012, the Mortgage Metrics Report said. Most of those loan modifications — 95 percent — involved a combination of rate freezes or reductions, term extensions or compounding interest less frequently.

Guideline changes have lowered the criteria for refinancing under federal programs, like the Home Affordable Refinance Program, which helps borrowers who aren’t behind on mortgage payments, but who can’t get traditional refinancing.

According to the Mortgage Metrics Report, “more recent modifications that emphasized reduced payments, affordability and sustainability have outperformed modifications implemented in earlier periods.” In 2008, 16.1 percent of mortgaged properties were in foreclosure. In 2011, that number had decreased to 4.9 percent.

This does not include people who refinanced traditionally, meaning they replaced their prior mortgage with a new one.

Still, the application process for traditional new and refinanced mortgages hasn’t been relaxed. “Now we document just about everything,” Miller added.

That includes, more recently, any large non-paycheck bank deposits, which may raise red flags for lenders.

Basic documentation for mortgage applicants includes the last two years’ W-2s and 1040s, along with the two most recent pay stubs, the last two months of bank statements and a government-issued identification.

Additional documentation needed may vary, so it’s best to contact a loan officer to find out what other documents may be required — most experts advise talking to multiple loan officers to find the one that best fits your needs.

Once you do, the loan officer can help walk you through the process, give guidance on different mortgage options and get you to the closing table.

“Gather everything that the loan officers request and provide it to them as soon as possible in the process,” Miller added. “And expect potential additional requests for information.”

To inquire about obtaining or refinancing a mortgage, contact Miller at (866) 644-6910 or Marsack at (586) 330-9167.