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Interest rates remain low and favorable for homebuyers

Lenders around the state say that mortgage rates continue to be good for homebuyers with the majority of buyers preferring to go with a fixed rate rather than variable rates.

In the business for 27 years, Brenda Swett of T. Graham Mortgage’s Pascagoula office thinks interest rates are wonderful. “Any time you see an interest rate less than 8%, it’s good,” she said. “We’re quoting 5.875% with no points and no origination fee.”

With low interest rates available for homebuyers, she sees little use of variable rates and does see 100% financing for conventional loans. “The primary reason is that the interest rate is so low, buyers can invest their money in other things for a higher return,” she said.

She points out that the Mississippi Home Corporation (MHC), a nonprofit organization, can advance a down payment and set an interest rate comparable to the market rate. The MHC can also give down payment assistance for first time homebuyers or those who have not owned a home in three years. This assistance has income limitations that must be met. The City of Pascagoula also has a down payment assistance program.

“The market is really great right now. It’s a seller’s and a buyer’s market,” Swett said. “A buyer can definitely get the home of their dreams. Now’s the time to buy.”

Consumers have gotten spoiled to lower rates of 4.5% and 5%, Todd Chapman, vice president and mortgage sales manager of AmSouth Bank, feels.

“The rates are still very good, and we stay right around 6% on a 30-year loan and 5.375 on a 15-year loan,” he said. “If a buyer knows he will be in a house a long time, we recommend a fixed rate instead of a variable.”

Offering a range of mortgage products to fit everyone, AmSouth does some interest-only loans for buyers who know they will be in a house for a short time. They are doing a lot of construction permanent loans these days. The buyer closes one time only, before building begins. Once the house is complete, the loan is rolled to a permanent loan.

“The customer gets the best of both worlds,” Chapman said. “During construction, he knows the rate is capped but can take advantage of the market rate when construction is complete. We’re doing a lot of those throughout the state. Once we explain it, customers want it.”

Based in Jackson, Chapman says he knows housing bubbles exist in other parts of the country but not in the metro area of Hinds, Rankin and Madison counties. A bubble is created by having a lot of houses in a price range on the market that are not selling at the price believed to be the going rate.

“This time of year we want a lot of inventory,” he said. “We’re in our season and have a good selection. There’s a lot going on here. There are a lot of new houses being bought and others changing hands. The main message is that interest rates are still great, and the economy is getting stronger.”

Houses are a good buy in Tallahatchie County, according to Otey Sherman, branch manager of Union Planters Bank in Charleston. “It’s a buyers’ market in this area,” he said. “With the favorable interest rates, a buyer’s money can go a lot further in a home here, getting three times the house they would get somewhere else.”

He says the community is a short commute to more industrialized areas and that existing homes offer quality construction and a good selection. “Some of these houses were built in the 1920s and have some of the finest redgum hardwood in the world. It’s like mahogany. You can’t get any finer wood that that,” he added.

Jerry Gillespie of Guaranty Bank & Trust in Belzoni agrees that rates are still favorable for homebuyers. “I can remember when the rate was 7% or 8%,” he said. “We’re doing home loans but not at variable rates. Personally, I wouldn’t do it. I want to lock in a rate.”

Business has picked up for Realtors all across the Coast, says Sharon Rice, senior vice president of Dryades Mortgage Company. “There are a lot of products to get people in homes,” she said. “There’s a lot available, even for those who are credit impaired. It’s a good time of year, and with the growth we’re experiencing here, things are moving.”

Rice said variable rates are attractive to military personnel who know they will be in the area only a couple of years. However, with interest rates remaining low, other homebuyers tend to choose a fixed rate. She said her company also works with homebuyers who prefer 100% financing. There are also a number of ways to help first time homebuyers.

Scott Brunner, executive director of the Mississippi Association of Realtors, is not hearing any negative comments from members about mortgage rates. What he is hearing from local boards is that things are good.

“We hear from strong markets that sales are good and holding,” he said. “Realtors and homebuyers like the mortgage rates.”

Contact MBJ contributing Lynn Lofton at mbj@msbusiness.com.

About Lynn Lofton

One comment

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