Avoid your ARM rate Increase by Refinancing

The effects of refinancing your mortgage can be dramatic, since it's a tool you can use to improve your financial situation. To take best advantage of it, look at where you are and assess your needs. Then explore the market.

Here are four great things a mortgage refinance can do for you:

* Lower your monthly payment

Simply exchanging a higher interest rate for a lower one will reduce your monthly mortgage payment. But you may also be able to lower your payment by changing from one type of loan to another.

Moving from a fixed rate to an adjustable rate may put more cash in your pocket each month, but it works best if you know you'll move before the initial rate ends.

* Stabilize your mortgage rate

If you already have an adjustable rate mortgage and your initial interest rate period is about to end, you can refinance to a fixed-rate that may save you money over time. The interest rate on an adjustable-rate mortgage can keep climbing. A fixed-rate loan takes the guesswork out of budgeting.

* Put cash in your pocket

You can get funds by doing a cash-out refinancing, where you can draw on your home's equity by borrowing more than you currently owe. It can be cheaper than taking a home equity loan or second mortgage, which generally carry higher interest rates.

* Make your debt more manageable

If you have enough equity in your home to cover your other debts, refinancing to get the cash may work to your advantage. It may reduce your total monthly payments and the larger mortgage may be tax deductible, an advantage not available with credit cards. To make this plan work, you'll naturally need to refrain from running up credit card debt again.

It's important to define your needs and your abilities before refinancing. Once you know what they are, it will be easy to find the Best refinance mortgage deal for you.

Existing home sales fall for 4th month

The National Association of Realtors reported yesterday that sales of existing homes dropped by 3.8 percent in June to a seasonally adjusted annual rate of 5.75 million units. That is the slowest sales pace since November 2002, and the decline was about twice what had been expected.

The median price of an existing home edged up to $230,100, 0.3 percent more than a year ago. The median is the point where half the homes sold for more and half for less.

It was the first price gain in 11 months. Analysts, however, said they were looking for prices to fall further because of the high level of unsold homes.

For June, the median price of a single-family home rose by 0.1 percent and the price of a condo increased by 2.6 percent compared with a year ago.

"With inventories still way out of line, unless prices fall a lot more, the housing market will not turn around any time soon," said Joel Naroff, chief economist at Naroff Economic Advisors.

Separately yesterday, the Federal Reserve said in its so-called Beige Book report that the economy expanded in June and early July. But most Fed regions reported declines in residential construction and real estate activity.

Economy Springs Out of Rut and Grows at 3.4 Percent Pace

The new reading on gross domestic product, released by the Commerce Department on Friday, marked a big improvement from the first three months of this year, when economic growth skidded to a near halt at just a 0.6 percent pace, the slowest in more than four years.

At the White House, President Bush said job growth has been strong and the economy is resilient and flexible. "I want the American people to take a good look at this economy of ours," Bush crowed.

Stronger spending by businesses and government powered the rebound in the April-to-June quarter. Individuals, however, tightened their belts as they coped with high gasoline prices and the ill effects of the housing slump. The sour housing market continued to weigh on national economic activity in the spring but not nearly as much as it had in previous quarters.

Inflation -- outside a burst in energy and food prices -- moderated.

The second quarter's performance was better than the 3.2 percent growth rate economists were expecting. It was the strongest showing since the first quarter of 2006, when the economy expanded at a brisk 4.8 percent annual rate.

Gross domestic product measures the value of all goods and services produced in the United States. It is considered the best barometer of the country's economic fitness.

"I think the confidence level of companies has come back. That's why there was a modest pickup in capital spending," said Ken Mayland, president of ClearView Economics.

Even as the economy picked up speed in the spring, inflation managed to settle down.

An inflation gauge closely watched by the Federal Reserve showed "core" prices -- excluding food and energy -- rose at a rate of just 1.4 percent in the second quarter. That was down sharply from a 2.4 percent pace in the first quarter and was the smallest increase in four years.

That should help ease some inflation concerns. Fed Chairman Ben Bernanke has said the biggest threat to the economy is if inflation doesn't recede as policymakers anticipate. Out-of-control prices are bad for the economy and the pocketbook. They eat into paychecks, erode purchasing power and reduce the value of investments.

The Fed has kept a key interest rate at 5.25 percent for more than a year. Economists predict that rate will stay where it is through the rest of 2007.

New Home Sales Down Substantially

The Commerce Department reported that sales of new single-family homes dropped by 6.6 percent last month to a seasonally adjusted annual rate of 834,000 units. The decline was more than triple what had been expected and was the largest percentage drop since sales fell by 12.7 percent in January. Sales are now 22.3 percent below the level of a year ago.

The median price of a new home sold last month dropped to $237,900, down by 2.2 percent from a year ago. It was the biggest year-over-year price drop since a 6.5 percent fall in April. The median price is the point where half the homes sold for more and half for less.

The big drop in new home sales followed a report Wednesday showing that existing home sales dropped by 3.8 percent in June to a five-year low. The weakness reflects spreading troubles in the mortgage market as more borrowers are defaulting on their loans, dumping those homes back on an already glutted market. In addition, banks and other lenders are tightening their standards, making it harder for prospective buyers to qualify for loans.

By region of the country, new home sales fell by 27.1 percent in the Northeast, 22.5 percent in the West and 17.1 percent in the Midwest. Only the South saw an increase in sales, a gain of 7.6 percent.

Economists believe the weakness in housing could linger through the rest of this year until a huge overhang of unsold homes is worked down. For June, the inventory of unsold new homes was unchanged at 537,000 units.

Closing Costs Highest in New York, Survey Says

A new nationwide survey released by Bankrate, Inc. showed that
New York State is the most expensive location in the country to close a mortgage transaction. The average closing cost in New York is $3,830, compared to Indiana (least expensive state) at $2,339. The survey compared the costs of lender fees, title fees and settlement fees in 51 geographic locations. Included in the study is a detailed listing of average closing fees by state, and a printable worksheet for consumers to compare average costs to their lenders' fees.

"Consumers armed with information can make better deals," said Holden Lewis, senior reporter at Bankrate.com. "Many fees are fixed costs, but others are negotiable. Doing homework can save consumers money in the end," Mr. Lewis added. The Bankrate survey includes tips and advice on saving money on
closing costs.

Bankrate's Closing Cost Survey was conducted in June of 2007 by obtaining four to nine good faith estimates from the Web sites of online lenders. Researchers picked a ZIP code in some of the largest cities in each state and requested information on the closing costs for at $200,000 loan. They requested fees on a 30- year, fixed-rate mortgage for a borrower with a 20 percent down payment and good credit to buy a single-family house. Bankrate's survey includes lenders' origination fees and title and settlement fees, and not taxes or prepaid items.

2007 Closing 2007 Rank 2006 Rank State Costs 1 1 New York $3,830 2 2 Texas $3,413 3 5 Florida $3,175 4 12 Pennsylvania $3,169 5 4 Ohio $3,047 6 3 Hawaii $3,008 7 13 New Jersey $2,996 8 11 Oklahoma $2,978 9 8 New Mexico $2,922 10 25 Delaware $2,904 11 6 Connecticut $2,858 12 14 Massachusetts $2,849 13 18 Louisiana $2,844 14 16 Mississippi $2,836 15 21 Tennessee $2,832 16 7 Alaska $2,811 17 17 Calif. - LA $2,779 18 27* Rhode Island $2,768 19 38 Maryland $2,755 20 32* Virginia $2,727 21 49 New Hampshire $2,724 22 46* District of Columbia $2,722 23 36 North Dakota $2,719 24 23* Colorado $2,705 25 50 Michigan $2,694 26 30 Minnesota $2,692 27 41 West Virginia $2,692 28 35 Arkansas $2,687 29 27* Maine $2,671 30 29 Vermont $2,666 31 20 Georgia $2,655 32 32* Utah $2,646 33 19 Idaho $2,627 34 48 Montana $2,619 35 9 Kentucky $2,602 36 40 Iowa $2,583 37 23* South Carolina $2,558 38 37 Washington $2,555 39 10 Alabama $2,552 40 42 South Dakota $2,532 41 15 Oregon $2,532 42 44 Kansas $2,521 43 39 Nebraska $2,515 44 26 Wisconsin $2,508 45 51 Missouri $2,496 46 45 Arizona $2,489 47 34 North Carolina $2,487 48 22 Nevada $2,467 49 31 Illinois $2,401 50 46* Wyoming $2,390 51 43 Indiana $2,339

U.S. home sales, prices to slip more

U.S. home sales and prices will fall further in 2007 than earlier expected, a leading realty trade association predicted today. The National Association of Realtors trimmed its sales forecast for the fifth straight month and also widened its predicted drop in existing home values.

Existing-home sales are seen at 6.11 million units this year—down from the 6.18 million units it predicted last month. This year’s sales will be the lowest since 2002, when 5.63 million existing homes were sold. But even with the decline, this year would rank as the fifth highest on record, the trade group said.

Home prices fall for a record tenth-straight month

Sales of existing homes fell for a third straight month in May, dropping to the lowest level in four years as the median sales price declined for a record 10th consecutive month.

In a troubling sign for the future, the inventory of unsold homes shot up to the highest level in 15 years, meaning more downward pressure on prices in the months ahead until the inventory glut is reduced.

Sales fell by 0.3 percent in May to a seasonally adjusted annual rate of 5.99 million units, the National Association of Realtors reported Monday. Sales now stand 10.3 percent below where they were a year ago.