European Stars And Stripes (Newspaper) - May 30, 1986, Darmstadt, Hesse                                8 the stars and stripes Friday May 30,1986 by Bod hover staff writer that High interest mortgage negotiated several years ago May be depriving you of Money you could be saving. In fuel Jour Home loan May be More obsolete than you realize. If it is you car blame declining interest rates. After pealing above 18 percent in 1981, mortgage rates have steadily fallen to below 10 percent. Millions or americans a responding by refinancing their Homes to save Money on interest payment. Up to 30 percent of All current mortgage business is refinancing. Whether you should join the crowd de pends on your circumstances if you plan to sell your property in � year or two refinancing May not pay. To make refinancing worthwhile you must own your property Long enough to recover refinancing expenses. If your new mortgage saves $150 in monthly payments it will Lake 24 months to recover refinancing costs of 13,500. After that you la be ahead of the game. The question of refinancing hinges on How Long you intend to keep the prop Erly says Charles wieck a Florida real estate consultant. Americans used to keep their Homes a lifetime. But today Yon have to ask this question because prop Estiu change hands far More frequently than in he past.". If you decide to refinance you la have to choose Between a fixed rate and an adjustable rate mortgage. In the Early 1980s, Lender were reluctant to underwrite fixed rate mortgages because they had no idea when or at what level interest Rales would Peak today that has changed. Many Home owners Are switching to fixed rate Loans to lock in current interest Raits. If you think Rales still Haven t hit Bot Tom you can Lake out an adjustable Rale mortgage says Wick who has watched rates run up and Dawn Over the past 20 years. That Way you la be protected if rates drop still lower but you la also be subject to higher Rales if interest  some owners Are stuck with adjustable Rale Loans because hut s Alt they can of mortgages Spur potential savings May make new Home loan worthwhile monthly principal and interest in �1,000 of mortgage Mort Gog a to 11.4711.66 11.85 11.07 1128 11,48 11.46 ,1 13.83 us 12j212.80 12.9913.17 12.62 1105 note multiply the coat Par $1,000 by the Hie 01 the mortgage tin thousands. The Antwi Tyves you me monthly payment including principal and merest for example for 0 $46.500 mortgage for 30 years at 13 percent must Pray 48.5x11.07"s536.90mortgaga percent. Cherigo trl Tuni 0/tpnc soul cd in Scago Titu Burina co. Ford. The lower interest on variable rate f Loans makes them More affordable. Some owners prefer adjustable Rale Loans because they regard them As potentially assumable mortgage that might be taken Over by future buyers. While the lowest interest rate is the Obj Yective of refinancing obtaining it May Lake same Effort. Mortgage Rales differ by re Gion state county and even by lending in j Slit ution. Refinancing costs also vary from Region j j to Region. And there Are potential penalties i for paying off existing mortgages before expiration although veterans administration and Federal housing administration Loans a exempt from such penalties. Wick suggests shopping for the Best in Ujj Lerell rates and the lowest refinancing costs. ".  real estate advisers say the instill lion holding your current mortgage or other lenders you know should be con-1 acted first. Some lenders flush with Money have offered lower interest mortgages at no Cost to borrowers. Such offers generate publicity and stimulate curiosity about refinancing. But they re the exception. The vast majority of borrowers refinance i ing properties will have to pay Points the up front charges assessed by lenders and refinancing charges similar to those paid on the original mortgage. From one to four paints May be charged i with three a Good bet on the average loan. Three Points on a $100,000 loan Cost the Borrower $3,000 on a 150,000 loan the Cost . Some refinancing costs May be dropped j if you re dealing with the same Lender but you cannot count on it. Among other things you May have la pay for a title search and insurance termite inspection site Survey municipal inspection and Legal fees All of which could add up to 3 percent of the loan. Unless you have a a or Cha mortgage the penalty for paying off your existing loan ahead of schedule could amount to i per cent to 2 percent of the outstanding Princi pal. Your mortgage agreement will specify if you Are liable for such a penalty. Shorf Ferm joans can pay off in the Long run you can make a bundle simply by shortening the term of your Home mortgage. Over the life of the loan you la be thousands of dollars ahead. Declining mortgage rates now under 10 percent Are behind the switch to Shorter term Loans. Both lenders and borrowers arc finding advantage in the change. Al the 16 percent 10 in percent rates of 1981 and 19b2, few borrowers could afford Short term mortgages. At cur rent Rales Many can. If you have enough time left on your mortgage to make it worthwhile and if larger monthly payments Are within your budget you la profit in the Long term by switching to a Short term loan. Maximum savings Are achieved by combining a Low Rale with a reduced payoff period. Not Only will you gel the Benefit of a Low rate by refi lenders Are willing to accept lower interest on Short term Money. Dancing shortening the term of he loan should give you the Best rate available in the current Market. That s be cause lenders Are willing to accept lower interest on Short term Money. A common refinancing plan reduces a 30-year mortgage to a 15-year loan. The difference Between a 15-year and 30-year mortgage is demonstrated by comparing costs on �50,000 at 9,75 percent. The Borrower pays $59,320 less in interest payments on the Shorter loan. Monthly payments on the 15-year mortgage run $519.50 for a total of $95,310. Payments on the 30-year mortgage Are $429.50 for a total of $154,630. The spread in payments Between the two Loans could be even greater As this example assumes the same interest on the 30-year and 15-year mortgages. In practice lower interest would be available on the 15-year loan. The difference Between the Lender s Lake on the 30-year and 15-year mortgages greater than the �50,000 Princi pal of the loan is achieved by increasing monthly pay ments by 23 percent. If you re Temple to switch to a Shorter term loan you la have to decide if you can afford the somewhat higher monthly payments. Bob Hoyer How much Down payment 20 % May not be enough How much Money Mast you put Down on your new Home if you re a Middle income earner you la probably have to come up with 20 percent of the Cost. But for the Purchase of a 1100,000 Home 20 percent Down won t be enough if you can t afford to finance the remaining . The minimum Down payment Money a Lender will accept is determined by the Borrower s ability to handle debt. Charles week a real estate consultant who has been dealing with military buyers for More than 20 years says Many potential sales go out the window because clients can t raise the Money for Down payments. It s the dream of retired military people to buy their own Homes Wick says. But unfortunately Many team they can l afford to buy. Many Hope to buy a Home with to Down payment and. It coma a a Shock when they team they can  the veterans administration will finance the full Cost of a property but Only for those who have sufficient in come to meet the larger monthly payments that such financing entails. And thai excludes most veterans. The offer of 100 percent financing sometimes is used to stimulate sales. You tee properties advertised for no Down payment,1 wieck says. But then you Cli Eccl them out and you learn that Only borrowers with Large incomes can afford la buy with no Money  most us lenders figure that if total housing com mortgage properly lax and insurance exceed 28 per cent of income the Borrower can t afford the loan. They also say thai total Long term debts including real estate obligations should not exceed 36 percent. Although High income buyers can afford 100 percent financing there Are advantages to making substantial Down payments. With Large Down payments tenders customarily reduce financing charges because buyers have More equity in their properties. Robert Potash a real estate lawyer in Greenwich conn., advises clients to make Down payments of at least 20 percent. He says larger Down payments can trim Hundred or even thousands of dollars from closing  Hoyer