By Jeff McKinney
The Cincinnati Enquirer

With mortgage rates at their lowest levels in 30 years, prospective home buyers still on the sidelines in Greater Cincinnati are wondering when their window of opportunity will close.

First, the good news. Mortgage industry analysts expect rates to remain relatively stable between now and July.

CALCULATORS

Use our online mortgage calculators to determine what your monthly payment will be, how much you can afford to borrow, whether you should refinance and more.

Now, the not-as-good news. If the economy continues to strengthen, mortgage interest rates are likely to end 2004 at about 6.5 percent, up 1 percentage point from the current national average of 5.5 percent, but still low by benchmarks of the past three decades.

So for those who have been waiting to grab the lowest possible rate on a 30-year loan, the clock may be ticking.

"See if the home is available at a price you can afford at today's interest rates, because rates will continue to rise during the next couple of years," said Doug Duncan, chief economist of the Mortgage Bankers Association.

He also said homeowners considering refinancing might want to move soon because their ability to maximize savings on a refinanced loan disappears as mortgage rates rise. The traditional benchmark for refinancing is when the mortgage you are paying is 2 percentage points higher than the current rate. However, variations in terms from lender to lender might make refinancing worthwhile if the spread is slightly less.

Industry observers say timing is important and prospective home buyers should shop around for a deal because the hot housing market in Northern Kentucky and the region's Ohio communities has sparked a myriad of options that vary from lender to lender.

The falling rates helped Tammy Murphy buy a home in Blue Ash in December. She obtained a $138,000 loan from Fifth Third Bank, reduced to $131,000 by a $7,000 grant from the Federal Home Loan Bank of Cincinnati to help cover the down payment and closing costs. She received the grant through Fifth Third's participation in the Federal Home Loan Bank's affordable housing program.

Murphy got a 4.875 percent rate on a three-year, adjustable-rate mortgage with a monthly payment of about $623, not including insurance and taxes.

She said she waited a year before rates fell to a level she could afford, then bought a home in the area in which she grew up. A single mother of three, she said getting her children in Sycamore schools made the wait worth it. She also was able to buy a larger, four-bedroom home than she might have been able to afford in times of higher rates.

But she quickly closed the deal in December, fearing rates might go back up. "It is the time for Americans to buy because rates are so affordable," Murphy said.

The average rate on a 30-year, fixed-rate $100,000 mortgage in Greater Cincinnati was 5.73 percent as of Monday, down from 5.95 percent the same time a year ago, according to a weekly survey by the Cincinnati Area Board of Realtors.

But the local rate is still up from the 5.21 percent average of June 16, 2003, the lowest recorded since the local Realtors group began tracking rates in 1985.

Stewart Greenlee, senior vice president of mortgage lending at Fifth Third, the area's largest home lender, said renters thinking about making the jump to ownership might be surprised - assuming they have reasonably good credit - at how large a mortgage they could afford.

The average monthly apartment rent in Cincinnati is $642 , according to CB Richard Ellis, a local real estate consulting firm. Greenlee says a person who qualified for a 30-year, fixed-rate mortgage at 5.73 percent could borrow up to $110,250 on a home and make the same $642 monthly payment.

Don Bahr, senior vice president at the Bank of Kentucky, agrees. But he also said he would not gamble that rates will drop much lower, especially if the economy heats up.

Experts suggest that, despite the attractiveness of current low rates, consumers should do their homework to determine how large a mortgage their personal budgets can bear.

"Don't try to time your purchase solely on the outlook for mortgage rates, but when it best fits your individual circumstance," said Greg McBride, a senior financial analyst at Bankrate.com, which tracks mortgage rates nationally.

E-mail jmckinney@enquirer.com