Originally Published: December 2, 2002 6:10 p.m.
Forget milk. Got mortgage?
If so, now is an ideal time to explore your options, with an eye toward either refinancing an existing mortgage or possibly applying for a home equity loan if your circumstances are conducive to same.
Why? Well, it's because home loan rates at this time are the lowest that most of us have seen in our lifetimes. They could drop even further, of course, but the chance that they'll head north instead of south is probably greater.
Let's take, for example, the rates that my bank presently offers. (I'm not at liberty to name the bank because folks might construe it as free advertising. But I will provide a hint: It shares the same initials with the National Basketball Association.)
The rate the bank is offering on home refinance loans is 5.8 percent, with a seven-year term, and the home equity line of credit entry rate is 2.5 percent, which rises to 4.75 percent after six months, with those quoted rates available through the end of the month.
Welcome, folks, to Refinance City and its suburb, Equityloansville.
Now, the aforementioned refinance offer provides an example of what you would be paying over those seven years on a $100,000 mortgage, with the monthly repayments over the 84 months being $1,451.50. Naturally, if you're seeking lower payments, you can request a loan of longer duration and pay considerably less accordingly. The interest rate traditionally is higher for a longer-term loan, but still should be an attractive option if your existing rate has been in place for a number of years at a rate that is in double digits or is crowding double digits.
Let's say that your 30-year home loan is in its infancy. If that's the case, only about one-tenth or so of your monthly payments is being applied to principal, with interest to the lender eating up the lion's share. That ratio will reverse itself near the end of the 30-year term, of course, but by then you will have paid out a phenomenal amount of interest, with the only consolation being that it is tax-deductible.
With such rates – and you can, and should, take Toni Tennille's suggestion to "shop around" at various banks for the sake of comparison – refinancing an existing home loan with higher rates or going for an equity loan if it's for a good cause, such as paying off high-interest-rate credit cards – is a slam dunk.
A downside to taking out an equity loan, of course, is that you're putting up your home as collateral and lenders can foreclose should you default. So weigh the risk and act accordingly. And please don't take out an equity loan and invest all the proceeds in the stock market. People who did that three years ago lived to regret it, eh?
Don and Norma Wigal have only one grandchild. But what the Prescott couple lacks in quantity in that department is more than made up for in quality.
What fourth grader Jessica Noyes of San Diego did last month prior to her 10th birthday party was to ask her guests to bring the cash they would have spent on a gift for her so that she could donate it to a local charity instead. And she ended up collecting $310, which she handed over to workers at the Helen Woodward Animal Shelter. Her inventiveness, and generosity, prompted a nice write-up, with a photo of the youngster, that appeared in the San Diego Union.
Jessica, an unabashed animal lover, is planning to volunteer at the Woodward shelter as a dog walker when she's a little older. At the moment, she has a fish named Charlie and a guinea pig named, appropriately, Guinea. (Reminds me of a cat I once knew named Fraidy.)
In the animal kingdom, she confided, "Guinea pigs are my favorite."
May her tribe increase.
Contact Jerry Jackson at email@example.com or by phone at 445-8179, ext. 1102.