I BUSINESS I

Thinking Of Refinancing?
The Time Is Now

KIMBERLY LIFTON

Staff Writer

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54

FRIDAY, JANUARY 24, 1992

n the last two months,
Jim Bellinson has
refinanced his home
twice. He'd do it again
tomorrow if interest rates
plunged.
Mr. Bellinson, 31, rushed
to Worldwide Financial Ser-
vices in Bloomfield Hills to
refinance in December,
decreasing the interest rate
on his 30-year mortgage
from 9-7/8 to 9 percent. Then,
after the Federal Reserve
cut its discount rate a full
percentage point to 3.5 per-
cent late last month, Mr.
Bellinson figured he'd try for
a better rate.
He secured a 30-year loan
at 81/2 percent interest with
no points (a percentage of
the mortgage that can range
from zero to 4 percent of the
loan) and no closing costs.
"How can you turn down a
deal where it will cost you
less each month and it costs
you nothing to do it?" Mr.
Bellinson said, adding "I
recognize my monthly
payments would be even
lower if I paid points and put
cash down."
Mr. Bellinson is one of 3.2
million Americans who
refinanced his home in the
last year, according to a new
study conducted by
economists Tom Hollaway
and Richard Peach of the
Mortgage Banker's Associ-
ation of America.
Like the others, Mr.
Bellinson has taken advan-
tage of the lowest interest
rates since the mid-1970s.
The refinancing business
has created a boom for local
banks, mortgage brokers
and mortgage bankers. Yet
the boom also has created a
backlog of paper work for
those processing the loans.
As a result, refinancing
may take longer than the
usual 15 to 30 days. Some
lenders are telling their
customers refinancing may
take as long as two months.
Many caution potential
customers that as consumer
confidence rises and the
economy begins to improve,
interest rates will rise.
In the past week, rates in
some areas are beginning to
move upward. Economists
have not yet predicted an
end to the boom, but most
said now is the time to
refinance.
A sampling of mortgage
rates from local banks shows
interest rates for a 15-year

fixed-rate mortgage with
two points range between
7.63 percent to 8 percent.
"The rates are going up
because the perception is
that the economy is improv-
ing," said Dan Gilbert, pres-
ident of Rock Financial, a
local mortgage bank. "Peo-
ple shouldn't be sitting on
the fence waiting.
"If you are sitting with a
101/2 percent interest rate,
every month you wait, you
are losing money," Mr.
Gilbert said.
Because of savings
through falling interest
rates which affect mortgage
rates, the Mortgage
Banker's Association esti-
mates that those who
refinanced will save $30
billion this year. Manufac-
turers National Bank Senior
Economist David Littmann
said the total amount saved
in Michigan will be $1
billion.
According to the Mortgage
Bankers Association study,
75 percent of all current
mortgages are candidates for
refinancing.
The study also states that
two-thirds of all mortgage

"The only time you
should pay points
or closing costs is if
you know for sure
you will be living in
the house in 15 or
30 years."

Howard Babcock

closings that will be process-
ed during this first quarter
will be refinancings.
Already this month,
Worldwide Financial, a
year-old mortgage broker in
Bloomfield Hills, has pro-
cessed 200 loans — 80 per-
cent of them refinancing
loans. When Worldwide
opened, 30 percent of its
business was refinancing.
Howard Babcock, a
Worldwide vice president,
said those considering
refinancing should follow
some basic guidelines:
• Lock in the cost of the
loan. It can rise as quickly as
it falls, and it is safer to be
sure.
• Make sure processing
time will take only one mon-
th.
• Do not pay points.
• Do not pay closing costs.
"The only time you should
pay points or closing costs is