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Rate-Shifting Heats Up With Falling Mortgage Costs

Mortgage Rates Reach New Lows In May Except for March, mortgage interest rates have generally declined this year and May was no exception -- As of May 22nd Freddie Mac reported that rates for 30-year fixed-rate mortgages reached 5.34 percent, a level not since 1971. The story is much the same for other financing options: 15-year fixed- rate loans, says Freddie Mac, are available at 4.73 percent while start rates for adjustable-rate mortgages (ARMs) fell to 3.61 percent. ARMs rates, of course, can change during the loan term and the rates shown here also require the payment of .7 points at closing. The low rates have set off still-another financing and refinancing frenzy, a likely record. "Some individuals who refinanced as recently as six months ago are finding it economically rational to refinance again. Absent any signs of inflation or a resurgence in the economy, rates should remain low enough to continue the current refinance wave to the point where we should hit $3 trillion for the year," says Doug Duncan, chief economist with the Mortgage Bankers Association of America. Is Now The Time For Rate Shifting? The news from the nation"s bankruptcy courts is not good. More Americans filed for bankruptcy during the first quarter of 2003 than in any previous quarter according to the American Bankruptcy Institute. The group also says there were 1.6 million bankruptcy cases filed in the year ending March 31st, up 7.1 percent from 2002. One way to avoid bankruptcy is to keep costs in check. If you have good credit, job security and growing real estate equity, now may be a good time to reduce monthly costs by shifting from credit card debt at 18 percent or more to low-cost home financing. One approach is to look at a full refinancing with a "cash-out" to pay-off both old mortgage debt and outstanding credit card obligations. If you want to keep your current mortgage in place, then look into a home equity loans. You"ll pay less interest with mortgage financing than with virtually all credit cards, the repayment terms for a given amount of debt are typically less per month with mortgage financing, and the interest you do pay for a home loan is likely to be deductible. In all cases, of course, debt is still debt and all debt must be repaid. Paying down consumer debt with home equity -- and then running up new credit card bills -- can actually worsen personal finances. Also, be aware that interest from real estate debt may not be tax deductible in certain situations. For details, speak with a tax professional. Common Sense & Termites Just about everyone has seen the old cartoon image of termites on the loose -- a single creature carving up a house in just a few seconds. Such visions from a cartoonist"s pen are simply untrue, but what is true is that termites can damage homes nationwide. According to the Department of Agriculture, termite damage in the U.S. amounts to more than $2 billion annually. That"s a lot of chomping, but the good news is that most termite damage can be prevented. It takes time for termites to substantially damage property -- but the catch is that termites often have such time because signs of infestation can be missed. What are the signs of termite activity? Look for such clues as mud tubes on outer walls; swarming around lights and windows; wood, stucco or brick veneer which touches the ground and; of course, wood damage. Contact a licensed pest control operator immediately if you see signs of termites or other wood-boring insects. Ask about training, qualifications, insurance and bonding. How To Create More Space At Home While homes seem to get a little larger each year, the volume of stuff each of us owns is also growing. What to do in the face of a space shortage? Here are several strategies that can help. *Clean Out. It"s too much to tackle a whole house at once, but how about one room per month? Consider what you really need, what you will likely need in the future, and the sentimental value which individual items may hold. *Add space. An outside storage shed is a great place to keep things which won"t spoil as well as garden and lawn equipment. Maybe get two sheds -- one for outside furniture and a second for tools, mowers and such. *Rent Storage. You see them everywhere, mini-warehouses where you can rent as much or as little space as you need, everything from a closet to a bay. Such facilities often have high levels of security and fire protection, factors which can make them ideal for storing bulky business records. *Donate. Many organizations will be delighted to receive furniture, clothing and electronics in good condition. Such donations can be tax deductible -- but keep good records in case Uncle Sam has questions. *Sell. The Internet is here and with it E-Bay and similar auction sites. What may be a storage problem for you could be a missing part needed by someone 2,000 miles away. Auction sites allow you to turn household and business items into cash, a good trade in many cases. For more articles by Peter G. Miller, please press here.

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