With interest rates at an all-time low, Killeen-Fort Hood-area mortgage lenders are keeping busy.
As of Thursday, the interest rate for a conforming fixed 30-year mortgage was 3.625 percent according to the US Bank. While the record low rates are certainly enticing to potential first-time homeowners, industry insiders say they are not the ones currently driving business.
“I have been busy because interest rates are so low,” said Susan M. Jones, West Bell County mortgage production branch manager for Extraco Banks in Harker Heights. “Everybody is refinancing.”
Jones said her business is currently split evenly between first-time homebuyers and homeowners seeking to refinance. She said the current interest rates are causing a lot of people to refinance, but she would like to see more new homeowners.
“When people are refinancing, it’s because they can save money with a low interest rate,” Jones said. “Ideally, the market would be 75 percent purchasers and 25 percent refinancing.
“From an economic perspective, that would tell us we have growth in our market,” she added.
Jones echoed the sentiments of many in the industry by saying Central Texas has been relatively lucky during the down economy. She said that although area homes have shown only modest appreciation over the last few years, the Central Texas real estate market has only had to deal with a very modest downward adjustment.
While she said there has been an uptick in home values recently, it will take more than low interest rates for the purchaser vs. refinancer ratio to get where she wants it to be.
“We have to have a settling down of the economy,” she said. “We have to see a settling down of real estate values across the country.”
Samantha Jackson, senior loan officer at First Community Mortgage in Harker Heights, said that although Central Texas has done relatively well throughout the economic downturn, national struggles have led to extremely tight lending guidelines. Jackson said the tougher guidelines motivate her to work harder for her customers. She added she also has to work harder to get customers.
“We’re working harder then ever,” Jackson said. “I’m out there looking for people every day. I have always been out there looking, but in the past, the phone range more.”
Jackson said tighter lending restrictions are an opportunity for her to serve her customers’ best interest.
“It’s really making sure people are well qualified because we don’t want them to end up in a bad position in a few years,” she said.
Jackson said the slow economy has led to stronger personal relationships with her customers.
“That has been a big change in the industry,” Jackson said. “Is is more relationship based than transaction based. It’s not just about closing the loan. It’s about making sure we are here for them in the future as well.”
There are options for locals whose credit may not be good enough to qualify for traditional loans, said Amy Merriman, vice president of operations at Texell, a credit union serving Bell and Williamson counties. Merriman said credit unions are becoming increasingly popular for homeowners and prospective purchasers.
“We are able to offer a broader suite of products, which are more creative,” Merriman said. “We can do loans outside of the traditional box. We can lend to a broad spectrum of members.”
Texell is owned by its members, not by stockholders. Merriman said this gives her lending officers more flexibility and provides members with a larger voice in institutional decisions. Every Texell member gets a say in policy decisions. She said Texell currently has more than 30,000 members.
“One vote for one member,” said Merriman. “Every member has a vote whether they have $5 or $500,000 in their account.”
Texell mortgage manager Shannon Cook said the member-based approach is the reason the credit union can work with homebuyers with less-than-stellar credit.
“Where other financial institutions require a certain credit score, we at Texell have the ability to approve someone for a first-time home purchase even after 10 banks might have said, ‘No,’” Cook said.
“Of course, that is all within reason,” she said.
One of the challenges area lenders face is making sure military personnel get good deals on homes. While it is easy enough to get them approved for loans, Jones said it is getting more challenging to find deals that allow them to break even when they sell.
“We have 100 percent financing on VA mortgages, which is a wonderful service to our servicemen and women,” Jones said, “But if we are in a downward adjustment period, then the market does not give the appreciation rate they need to break even.”
That is why Merriman recommends homebuyers get educated before they contact a mortgage lender.
“There is such a plethora of loan products out there to suit everyone’s specific needs,” she said. “Go ahead and learn. Do your homework before you do your shopping.”