For the second time ever, 30-year fixed mortgage rates fell below 4 percent Thursday. Thirty-year mortgage rates were 3.99 percent Thursday. Just five weeks ago, they hit a record low of 3.94 percent. The 15-year rates this week dropped to 3.31 percent, with a record low 3.26 percent five weeks prior.
Source: National Bureau of Economic Research
With a few 15-minute phone calls, Seth Bohannon saved $96,000.
The 29-year-old Liberty Mutual sales agent heard mortgage rates are low so he called up his loan officer. After some time on the phone and some legwork by the mortgage company, he cut almost 15 years off his mortgage and dropped the rate from 4.5 percent to 3.3. Now he's paying $200 more a month towards the loan, but he'll own his house before he turns 45.
"It was the smart thing to do, especially considering the long-term savings," he said Friday. "It's worth anyone taking 10 to 15 minutes of their time just to call an agent and just see, because you never know."
Bohannon is one of many homeowners taking advantage of record-low interest rates. For the second time in history, the rate on a 30-year fixed mortgage dropped this week below 4 percent to 3.99 percent, according to Freddie Mac. Just five weeks ago, it hit a record low 3.94 percent.
That helped lead to a 10.3 percent increase in mortgage applications last week over the week before, according to the Mortgage Bankers Association
"The real historic opportunity is on 15-year mortgages," said Bruce Dodd of Peoples Home Equity, who hosts a weekly radio show on mortgages. "The real dramatic savings can be you've got 26, 27 years left on your mortgage, your payment stays the same and you cut years off."
Paying off mortgages more quickly can easily lead to more than $100,000 in savings for many home owners. Dodd said rates could still drop a couple fractions of a percent lower, but those looking to refinance should do so sooner rather than later.
The federal government is doing pretty much everything possible to keep rates low, and the global economy won't likely get much worse before it starts improving, he said. That means rates are likely to not head much lower.
But those who took credit hits over the past few years may have a harder time taking advantage of the potential savings. Loan guidelines are far stricter than what they were before the recession and those offering loans have become increasingly scarce.
"It was like a popcorn bag. There were so many kernels there, we could place a loan and go. Now those have all gone away," said Selina Glass, the Churchill Mortgage home loan specialist who oversaw Bohannon's refinancing. "The guidelines are a little stricter now. It's harder to qualify someone to get into that mortgage loan."
That doesn't mean getting a loan is impossible. Glass said there was investor scarcity back in the late 1990s and early 2000s when she started in the business and today it may be easier to get a loan. Federal regulations have improved, she said, giving the industry qualification consistency.
The Chattanooga area has seen plenty of people qualify for loans, driving the sale of 1,623 homes between July and September of this year - a 15 percent increase over the same period in 2010, according to the Greater Chattanooga Association of Realtors.
Robert Nodes, organization spokesman, said October sales took a slight dip over last year's, but held steady compared to historical data over the past decade.
"The market's not in bad shape," he said. "It's actually in pretty good shape, all things considered."
A few months ago, Chattanooga had almost three times as many homes for sale than would have been considered healthy before the recession, Nodes said. Now, the inventory has dropped to only about 80 percent higher than normal.
As long as rates stay low, Nodes and other area experts expect the market will only improve for buyers.
"It has been an excellent time to be in this business, that's for sure," Glass said. "To get money at 4 percent, it's ridiculous."