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Should you refinance your mortgage?

USA Today (Society for the Advancement of Education), Jan, 1996

Executives are managing less and delegating more. Of 150 executives from the nation's largest companies polled by Office Team, a staffing service specializing in temporary administrative professionals, 93% indicated that they were giving employees more authority to make decisions and take action than they did five years ago.

"This newfound willingness to delegate authority is not so much an altruistic approach as it is a result of today's intensely competitive business environment," maintains Andrew Denka, executive director of Office Team. "Managers everywhere are realizing that, in order to increase productivity, they must give employees the authority to get the job done. Administrative personnel, for example, are taking on more responsibility for managing projects, computer resources, and making decisions about vendors.

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"For employees, this new situation is a tremendous opportunity. It gives them room to grow which they might not have had in the past. Those who are up to the challenge will reap benefits, including greater job satisfaction and promotability."

SHOULD YOU REFINANCE

YOUR MORTGAGE?

If you missed out on the wave of refinancing your home mortgage in 1993, when 30-year fixed rates plunged to below seven percent, you have a second chance to join the parade. Thirty-year fixed-rate mortgages have dropped to below eight percent in some areas, and the recent lowering of shortterm rates by the Federal Reserve may drive down mortgage rates even further.

Refinancing a home mortgage can offer several advantages. For instance, the size of your monthly payments will be smaller. If you have a $90,000, 30-year fixed mortgage at nine percent and refinance it at 7.25%, you will save $110 a month in mortgage payments. Refinancing can free up cash that can be invested in other types of assets for diversification, help fund a child's college education, build an emergency fund, or pay off the loan sooner (saving a substantial amount in interest charges).

Refinancing may sound like a great deal, but there is one hitch: it costs money to refinance. Lenders may charge a variety of fees, including points (each point is one percent of the total loan), title search, appraisal, and attorney fees. These costs may run two to five percent of the total mortgage. Or, the lender may cover all these expenses, but charge a higher interest rate than lenders who include closing costs.

If you do choose to refinance, the Institute of Certified Financial Planners considerations in mind:

* The longer you own your home after refinancing, the better the deal. If you plan to sell within the next two or three years, it's probably not worth it. A homeowner would need about 27 months to recoup the refinancing costs.

* The lower your refinancing costs, the more attractive the deal. Shop around.

* The more points you pay up front reduces your interest rate. The longer you will be in your home, the better this strategy generally is.

* The larger the loan, the less time it will take too break even since the savings will be greater in proportion to the fixed closing costs.

* Some states, such as California, allow lenders to use only the home itself as collateral in the event of default on a first mortgage. it the mortgage is refinanced, though, the lender can look to all of your assets.

* If you have an adjustable rate mortgage (ARM) and you're thinking of refinancing with a new ARM with a low first-year "teaser" rate, remember that it will probably make sense only if you save more in the first year than the cost of refinancing.

* If you refinance 100% on an ARM and interest rates later climb enough, you risk actually owing more when you sell than the house is worth.

MOVING OR TRAVELING?

TAKE MEDICAL RECORDS

If you're moving to a new community or taking a long trip, consider bringing along your medical records to safeguard your health, as well as save time and possibly money Andrew Newman, a pulmonary specialist who chairs Stanford University Hospital's Medical Records Committee, suggests that having data on past treatment and current or chronic ailments can help your new physician begin treating you properly without repeating tests or immunizations and asking needless questions. Moreover, in an emergency, the medical records can help health care personnel avoid serious mistakes, such as giving a medication you may be allergic to.

While state law varies, in most states, the medical record is the patient's property, not the physician's, so it's perfectly reasonable to ask for it." Newman points out. For vacations, a summary of allergies and immunizations, important X-rays, and a list of ongoing conditions may be sufficient to carry along in case an emergency arises.

Very often, he says, a primary care physician will have a complete record. If you're seeing more than one doctor, though, it's probably smart to ask each one for your records. As a practical matter, Newman recommends asking your personal physician and specialists for your medical records at least 10 days before you need them. That way, the doctors should have time to organize the documents properly before handing them over. Some physicians may ask for a small fee to cover administrative costs, such as photocopying.

Should you refinance your mortgage?

USA Today (Society for the Advancement of Education), Jan, 1996

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