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SALT LAKE CITY -- Historic low interest rates are driving would-be borrowers in droves to seek a refinance on their homes. And lenders are struggling to keep up creating both opportunity and potential pitfalls.
The average rate on a 30-year fixed loan has been hovering at about 4.15 percent - as low as it has been in 40 years. That has a lot of people looking to refinance. Many people are now asking whether it is worth it for them.
The last four years have been extraordinary for the housing market. The latest jawdropper: average interest rates on 30-year mortgages are now around 4 percent, the lowest in decades. Loan officer Beckie Shiveley says she's recently heard from roughly three dozen people looking to refinance.
"I've talked to a lot of people in the last week, week and a half. When rates drop a lot of people want to do it," she said.
Refinancing applications in August rose 83% from this year's low six months earlier. Julia Borst, of mortgage lender Guaranteed Rate, says she clearly remembers the days when rates were double what they are now. The lower rates mean it's easier for some to qualify for a loan, for others, refinancing is attractive because monthly payments can be much less.
"(There is a) huge difference and so obviously what it does for someone that is purchasing is it gives you a lot more purchase power," Borst said.
Those looking to refinance, or take out a home loan, need to ask a couple of questions: What can I qualify for? What can I afford?
"For a lot of people, you may find if you refinanced a year ago, you may not be able to save enough money," Borst said. "And I always say to people: What is the cost versus the benefit?"
The best advice is to be prudent and be patient. With the stubborn global financial crisis, rates are likely to stay low.
"My guess is we're going to continue to see historical lows for quite some time," Borst said
There are a number of websites for lenders where you can punch in your current rate and how much you owe on your home to figure if it might make sense to refinance. Of course, to know for sure talk to a mortgage lender and always be patient, there is a lot of backlog in the system.