Mortgage rates at lowest levels since Eisenhower years

Before closing on their new Sinatra Way home, Tim DeOnier and his girlfriend, Heather Clearwater, try out a bar stool that they’ve bought to see if it fits at the house’s kitchen counter.

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Gretel Daugherty

Before closing on their new Sinatra Way home, Tim DeOnier and his girlfriend, Heather Clearwater, try out a bar stool that they’ve bought to see if it fits at the house’s kitchen counter.

By Gary Harmon
Wednesday, July 28, 2010

Mortgage interest rates below 5 percent might be the sign of a moribund economy to some. Two Grand Junction families, however, are taking advantage of rates that last were this low during the Eisenhower administration.

For one family, the lower rates offer a level of comfort as the college years of their three sons approach.

For the other, a mortgage rate below 5 percent meant he could buy a three-bedroom home on his own just six years after graduating high school.

“We were incredibly lucky with what we found,” Timothy DeOnier, 25, said of his house, which was built in 2008 and he is getting as a foreclosure. “It’s a really good market now.”

Roy Ness isn’t so concerned about getting a good deal in a house. He, his wife, Ruth, and their three sons, Daniel, 14, Matthew, 13, and Will, 11, already have one.

“I have college coming up and some other stuff, so my house payment is something I want to manage,” said Ness, an investment broker at Financial West Group, 145 Grand Ave.

The Nesses took advantage of the low interest rate — 4 3/8 percent — to refinance their existing house.

Although a range of mortgage programs is available, Ness opted for the traditional 30-year mortgage, which leaves him able to pay off the loan early.

“What’s really interesting is that in the old days of 7 to 8 percent mortgages, it took four or five years before you started paying off principal,” Ness said. “Now you start paying off principal right away. I think refinancing at a low rate makes sense for people.”

Lower mortgage rates provide house hunters with more buying power, said Heather Gross, marketing director at Unifirst Mortgage, 610 Rood Ave.

The rates, however, seem to be driving a second wave of refinancings, not just for people wanting lower interest rates but for homeowners trading in their 30-year loans for 15-year mortgages. Rates are low enough that the higher monthly payments of the shorter-term mortgages are within reach, Gross said.

Not that long ago, “We were telling our people that the rule of thumb was 1 percent,” said Tor Hayward, president and CEO of Major Mortgage, 2474 Patterson Road.

That rule of thumb meant homeowners were advised to refinance only if they could get new rates at least a percentage point beneath their current loans.

“That was when the average price of homes was $150,000 to $175,000,” he said.

Now, the savings available from even a smaller drop in the mortgage rate can net significant savings, Hayward said.

Even $100 a month adds up to $1,200 a year, allowing for a relatively quick payback on closing costs, Hayward said.

His savings are substantial enough that he’ll recover his closing costs in three years, Ness said.

Realtor Ben Hill said even a $40-a-month reduction in mortgage payments has made it possible for buyers to move ahead with purchases they might not otherwise have been able to afford.

“It’s all about that interest rate,” Hill said.

For DeOnier, the interest rate was one of several pieces to come together.

DeOnier graduated from Grand Junction High School six years ago and is back home now after his enlistment in the U.S. Army put him in West Point, N.Y., for six years. He worked there as a surgical technician and has been hired to do the same work at St. Mary’s Hospital.

Although he expects to marry his girlfriend, Heather Clearwater, a nurse at St. Mary’s, and live in the house, he’s buying it on his own and expects to pay about $1,150 a month.

“We didn’t expect to get that nice of a house for the money I was looking for,” DeOnier said. “It’s kind of surreal. It would normally go for a lot more. We just hit it just right.”

It might get even better for DeOnier. It’s possible that his purchase will qualify for an extension of the $8,000 tax credit for first-time homebuyers. Congress passed and President Barack Obama signed an extension of the credit to Sept. 30.

For DeOnier, Grand Junction was definitely a buyer’s market.

“We looked at about 40 houses because there’s that many on the market right now,” he said. “We were incredibly lucky with what we found.”