WKRN, Nashville, Tennessee News, Weather, and Sports |Mortgage refinancing saving many Tennesseans money

Mortgage refinancing saving many Tennesseans money

As the Federal Government continues to pump money into the housing market, mortgage rates have plummeted to the lowest in decades.

Many Tennesseans are locking in new rates that are saving them hundreds of dollars a month.

Jonathan Smithson of WR Starkey mortgage said business was slow the last six months of 2008, but has picked up significantly since the 30-year-fixed rate mortgage fell to near 5%.

"We're doing 60 loans this January," according to Smithson, who was financing approximately 10 loans per month during the last half of 2008.  "It's almost chaotic.  It's a great problem to have, but is pretty wild, actually."

According to Freddie Mac, mortgage rates are the lowest since 1971.

Rates are low, but the question for homeowners is "can I take advantage of them?"

"Credit, this is obviously driven by good credit," Smithson tells News 2. "To get the best rate, you have to have good credit."

Smithson said refinancing a mortgage is easier in Tennessee, because the housing market hasn't been as volatile as the rest of the country.

As a general rule of thumb, Smithson said a homeowner should consider refinancing if they've got 5% equity in their home and a credit score in the mid-600s.

"We'll do analysis for free," said Smithson. "I'm sure most mortgage companies will.  If you call us up, within 30 minutes we can tell you whether it works for you, or makes sense for you to refinance."

Smithson said most calls are coming from customers who locked in interest rates above 6% a few years ago.

As a general rule of thumb, it's cost-effective for a homeowner to lock in new rate that's 1% lower than their current mortgage rate.