Adam Rosman mortgage refinancing

Adam Rosman of Rock Valley stands outside the home he and his wife, Karin, bought in August after refinancing their existing mortgage. Many people in N’West Iowa took advantage of low interest rates in 2020 to refinance loans or buy new homes.

REGIONAL—2020 encouraged many people to reinvest in the places they call home, but Adam and Karin Rosman did more than most.

The Rosmans, who live in Rock Valley, refinanced their mortgage and purchased a new home all in one year, taking advantage of last year’s plunging interest rates to make their money more effective.

The Rosmans had recently remodeled their home, and an appraisal indicated refinancing their mortgage would let them get additional cash out while getting a better interest rate.

“We saw an opportunity to take some equity out of the loan, pay down some debt and be debt free that way,” Adam said. “We used that money to reinvest, so we had money working for us instead of sitting in the house.”

That financial leverage came in handy in August when the Rosmans purchased a larger Rock Valley home where their sons, 8-year-old Elijah and 7-year-old Noah, could have a yard to play in. Adam said the upgrade would have happened in a few years anyway, but their new financial situation “moved up the timeline.”

The Rosmans weren’t alone in taking advantage of interest rates that plunged in 2020 to the lowest many mortgage lenders in the area had seen in two decades or more.

Cindy Van Regenmorter, a senior mortgage loan officer at Peoples Bank in Sioux Center, said interest rates in 2020 are the lowest she’s ever seen them.

“We hit all-time lows,” said Cindy Van Regenmorter, a senior mortgage loan officer at Peoples Bank in Sioux Center. “We were seeing 30-year mortgage rates in the 2 percents, 15-year rates that were low 2’s or even had a 1 in front of them.”

Before the coronavirus pandemic, interest rates for mortgages in N’West Iowa were closer to 4 percent. Rates dropped early in the year due to uncertainty in the market, and although they have begun to pick up slightly, they are still exceptionally low.

As a result, prospective homebuyers or homeowners like the Rosmans have been seizing the opportunity to get the most bang for their buck.

Refinancing is where Van Regenmorter saw the most action. Peoples Bank in Sioux Center refinanced almost twice as many mortgages in 2020 than the previous.

“2019 was already a really good year. 2020 came along and blew 2019 out of the water, because things stepped up that much,” Van Regenmorter said. “2020 was a crazy year in the mortgage industry and I know it was nationwide.”

Although 2020 was a good year for mortgages and 2021 is starting off looking much the same, results of a recent study indicate that if you were going to get a mortgage in 2020, N’West Iowa was a particularly good place to do it.

A study by SmartAsset, a financial technology company based in New York, ranked Iowa counties according to which had the best mortgage market. Results were determined by comparing loan acceptance rates, estimated five-year costs, property tax and annual payment.

While not a foolproof or exhaustive comparison, the ranking includes three N’West Iowa counties in the top 10. Sioux County was ranked number one, followed by Lyon County as number four and O’Brien County in the number six position.

Kristin Kleinwolterink, assistant vice president at Iowa State Bank in Sheldon, said N’West Iowa’s high rankings likely has a lot to do with taxes and overall cost of living, which is lower than in other more densely populated parts of the state.

“In O’Brien, we have a lot of smaller towns where property taxes are quite low,” she said. “You go to your Hartleys and Sanborns and they are quite low.”

While interest rates have risen slightly from the all-time lows they hit in 2020, Kleinwolterink said it is still one of the most affordable times to get a mortgage. Her advice for future homebuyers considering this step is to start by looking at their credit history and existing debt.

“How much money do you have each month that doesn’t go toward debt each month you can put toward a home?” she said. “If you have two car payments and student loan payments, that’s going to decrease the rest of your income, so you purchase a lesser home.”

And if you’re not looking to purchase, refinancing an existing mortgage may free up money to improve your home.

“A lot of people are refinancing or getting cash out to do repairs or improvements they put off doing,” Kleinwolterink said. “With rates being low, they’re like, ‘We might as well do these repairs.’ It’s purchasing and refinancing to get the best rate they can.”

Although COVID-19 contributed to the low interest rates that helped many homeowners upgrade to a better home for less money, it’s drained the housing inventory in many N’West Iowa communities. Fewer new homes were built last year because supply chains were disrupted by COVID-19, making it harder and more expensive to get the materials needed.

Van Regenmorter expects that continued housing demand, spurred by interest rates that have stayed low, will result in more construction this spring and summer.

“Constructions should be very strong, new constructions, just because of the low inventory,” she said. “Rates might go up a little, but I think they will stay strong and you’ll see strong movement of homes in communities yet.”