ANCHOR: What do you do if you’ve locked in your mortgage but interest rates have fallen?

ANCHOR: WGN’s Money Saving Expert Ilyce Glink is here with the answer to that and other questions from the Mailbag

GOOD MORNING

ILYCE: GOOD MORNING. Let’s start with Letter 1.

Sent VIA Email from Ruf2LAIR

I locked into my mortgage a month ago at 7 5/8, but bought down the rate to 7 percent for 1 points. I close at the end of the month, but interest rates have fallen so far that my 7 percent rate now seems high. What should I do?

ILYCE: It always seems like a good idea to buy down the rate of your loan because you’re going to live there forever, right? However, interest rates are substantially below where your rate is, and your lender is going to make a killing on your loan. As I see it, you have two choices. You can ask your lender to lower your rate before you close — and he may want to charge you for that as well — or you can close and immediately begin the process of refinancing your home loan. Here are a few tips for refinancing your loan:

Look for a zero cost loan. You’ve already paid too much in fees. If you have to pay something, limit the fees paid to 1 percent of the loan amount. And, don’t bother with 30-year mortgages. The average American keeps his or her loan less than 3 years. You can save loads of cash with a 5/1 adjustable Rate Mortgage. Let’s have letter 2.

Sent via email from J Golden

I’m having trouble finding a detailed new home punch list. Can you recommend where I can find such a list?

ILYCE: I think you may be a little confused. A punch list is an itemized account of stuff that the builder hasn’t finished in your new home at the time of closing. It’s different for everyone. For example, your punch list might include landscaping, touch-up painting, a missing cabinet door in the kitchen, a light fixture, and a crack in the ceiling. But someone else could have a completely different set of things wrong in their new home. Here are some things to know about punch lists:

ILYCE: First, before your closing, walk through your house and jot down anything that needs fixing or tinkering before closing. Your punch list must be in writing, preferably typed. The list should become part of your closing documents, and the developer must agree to fix them within a certain period of time. Finally, if there are any significant items that need to be fixed, like you’re missing your landscaping, or your deck or patio hasn’t been finished, or the roof has to be fixed, hold back enough money in an escrow account to hire someone else to fix the problems.

If the developer balks at holding back cash, warning bells should go off. You may have trouble getting this developer to come back to fix items on the punch list. Talk to your attorney about what you can do because once you pay for the home and close, you lose all of the leverage you have to get the developer to come back and fix things that go wrong with your home.

If you want to ask Ilyce a question, you can go to her website, www.thinkglink.com, or find her at wgntv.com.

June 18, 2002