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Refinancing Experts Take Questions

Aired May 29, 2004 - 16:00   ET


CATHERINE CALLAWAY, CNN ANCHOR: Hello, everyone, I'm Catherine Callaway in Atlanta. And here's what's happening at this hour. Saudi police and suspected Islamic militants are locked in a tense standoff at an oil compound in Khobar. The militants are holding several people hostage. Sources say at least 12 people, including one American were killed when gunmen attacked that compound.
And Pakistan says that it was only a test. Officials today test fired a medium range missile with nuclear capabilities. Pakistan alerted its neighbors prior to the test, including its nuclear rival, India. Tensions between the two countries escalated last year, raising fears of a heightened arms race, but relations have improve in recent months.

The death of NFL star, turned war hero, Pat Tillman, was likely the result of friendly fire. Army officials said today that Tillman was probably killed by gunfire from his own unit during an intense battle in Afghanistan. Tillman walked away from a multimillion dollar NFL contract to join the Army.

I'm Catherine Callaway and now back to Paula Zahn and CNN's coverage of the World War II memorial dedication.


ANNOUNCER: The most powerful invasion air force ever launched. The most gigantic armada in history. The allied lightning strikes. This is the supreme moment of invasion. This is frontal assault on an entrenched enemy. Let these pictures remind us that there's still a long road ahead to Berlin.


PAULA ZAHN, CNN CORRESPONDENT: And welcome back to our special coverage from Washington, D.C., this afternoon. On this eastern corner of the memorial, there are words honoring American women who served the nation during WWII, they are attributed to Colonel Avita Calpova (PH). "Women who stepped up were measured as citizens of that nation, not as women, this was a people's war and everyone was in it."

Joining me now are two of those women whose contributions broke barriers. Retired history professor Martha Putney was in the Women's Army Corps from 1943 to 1946, she is the author of the book "When the Nation was in Need: Blacks in the Women's Army Corps During World War II." And Francis Carter, wasn't the original model for "Rosie the Riveter," but she could have been, she worked on aircraft and yes, she was a riveter.

Good to see both of you. What an honor to be with you.


ZAHN: So often the contributions of women get, I guess, ignored in the discussion of World War II. Why should women -- the whole nation understand about women's efforts?

MARTHA PUTNEY, RETIRED HISTORY PROFESSOR: They should understand a number of things that we were a mighty support force for the male armed forces. I've got to say male because many of us did all of the tasks, all of the, what they call, military occupational specialties, as a man, except carry a gun.

ZAHN: Exactly.

And many of you weren't trained to do what you ultimately ended doing. It was stunning...

PUTNEY: That's right.

ZHAN: you were brought into this workforce and transformed into a mighty machine.

PUTNEY: Many of us were trained to do various technical tasks, like technicians. Medical-surgical technicians, of course, trained as even commissioned officers in the Women's Army Corps.

ZHAN: Francis, people might be surprised to learn about all the backgrounds of you who later took this very important role in World War II. Where did you all come from?

TUNNELL-CARTER: All over. We came from the countryside of every state, the cities and wherever women were. We came to serve through the "Rosie the Riveter" work.

ZHAN: And describe to us some of the work that you did.

TUNNELL-CARTER: My particular case, I was in the sheet metal department and so I worked with the B-29 airplanes and we were sort of a -- worked in Birmingham, Alabama, and sort of interior designers because the planes could fly into Birmingham and then we had to finish them up, and in my part, we were doing the sheet metal work, fuselages, and so forth, but then there were others doing hydraulics and electronics and so forth. And, they were ready for the war effort when we finished.

ZHAN: What was it like for both of you to have your service honored in such a beautiful way here this afternoon?

PUTNEY: Well, I think it's a bit late, of course, because many of those who deserved the honor are not available -- not here to receive it -- to accept it, but it is a memorable occasion. I've been in Washington for 40 years. I've seen a lot of dedications. This is the greatest. ZAHN: Well, we thank you for sharing your stories with us this afternoon, Martha Putney and Francis Tunnell-Carter. Best of luck to both of you.

PUTNEY: Thank you.

ZAHN: And aren't we lucky we got a cool day out here, today. Very comfortable out here. Meanwhile, Jamie McIntyre, CNN Pentagon correspondent, is standing by with a woman who had a role in the Army Medical Corps.

Jamie, it's all yours.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Paula, you know, everywhere you go there's a story, here. Somebody walked up to me a short time ago and said is there someplace these veterans can go and tell their story? And I said well, you can tell me. And then I met "Skip," here.

This is actually Charlotte Merritt. She was with the Women's Army Medical Corps in Richmond, Virginia.

And you had a very important job. You actually saw many of the casualties as they came back. What was your job? Tell us a little bit about that.

CHARLOTTE MERRITT, WOMEN'S ARMY MEDIAL CORP: Well, in the beginning I would meet -- we would go -- they would land near our hospital and we would go out in a van and we'd take them off one at a time on a stretcher and try to clean them up a little bit because they may be they'd been 48 hours without, you know, just being fed and that's all. And then we'd take them back to the hospital and they'd really make them comfortable and take care of them, and then over a period of time, they'd be evaluated by the colonel who was the head doctor.

MCINTYRE: So you really saw the cost of war close up?

MERRITT: Sure did. I had one boy with no stumps, it was clear up to his buttocks it was so high, and one arm off. But he was pleasant, he was fun.

MCINTYRE: Everybody knew they were in a very important cause. What did you feel today at the ceremony as you were sitting here?

MERRITT: Well, I wasn't thinking about that. I was thinking about how hot I was. No, I used to worry about them and I kept in touch with a lot of their wives and even with, my husband and I would stop and visit on trips we'd take, we'd just go and maybe sit in the driveway and talk for a while.

MCINTYRE: Have you seen the memorial yet?

MERRITT: Yes, uh-huh, last night we were there.

MCINTYRE: What did you think? MERRITT: I think it's wonderful. I really do. I'm sorry that my children's father's not alive so that he could see it. And now, he was in Europe. And my brother was in Europe too, in the worst of it.

MCINTYRE: Charlotte Merritt, thank you very much for talking to us.

And Paula, that really is a sentiment we heard a lot today. Very grateful that this memorial has been built and dedicated and a sense of sorrow that it was too late for some of the veterans who didn't have a chance to see it -- Paula.

ZAHN: Well Jamie, I don't know what it is about you. Maybe it's what you do 24 hours a day with your work at the Pentagon, but you certainly were a veteran magnet. We heard some wonderful stories from the people you interviewed today. You were touched by them, as well, weren't you?

MCINTYRE: Absolutely. I mean, you just -- I was just saying, at one point, that you could feel a chill go through the crowd as they waved their flags. There were way too many people for us to talk to. I've talked to so many, talked to a man who was a Navajo Indian and I asked him, "Well, were you one of the code talkers?" He said, "No, they did the talking, I did the fighting." He ended in a prison camp in Germany and was liberated after the war. Just thousands of stories.

ZAHN: Thank you for finding those wonderful stories for us, today. Jamie McIntyre.

As we leave you, General Douglas MacArthur famously reminded all of us that old soldiers never die, they just fade away. Even after the last veteran of World War II fades away, the monument, we've seen dedicated here today, will remind generations of Americans yet to come that there will always be a need for honor, sacrifice, loyalty, and love of country. It's the price of freedom and democracy.

I'm Paula Zhan. All of here at CNN are honored that you chose to share a part of this afternoon with us. To keep the memories fresh, we leave you now with another look at this day's sights and glorious sounds.



UNIDENTIFIED MALE: So it is fitting that we gather today around this handsome and evocative monument to such a noble undertaking, but no monument, however well positioned or polished can take the place of the enduring legacy of all of you, the people that we honor here today.

UNIDENTIFIED MALE: Certainly the heroes represented by the 4,000 gold stars on the Freedom Wall need no monument to commemorate their sacrifice. They are known to god and to their fellow soldiers who will mourn their passing until the day of our own. In their names, we dedicate this place of meditation.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When it mattered most, an entire generation of Americans showed the finest qualities of our nation and of humanity. On this day, in their honor, we will raise the American flag over a monument that will stand as long as America itself.




CALLAWAY: Hello, everyone. I'm Catherine Callaway in Atlanta. And here's the headlines this hour.

Sources say gunmen are holding between 20 and 50 people hostage on an oil compound in Saudi Arabia. Suspected Islamic militants attacked three locations in the Saudi oil city of Khobar, today. At least 12 people, including one American were killed, that's according to sources on the scene, there.

Pakistan is playing down the impact of today's missile test on peace talks with nuclear neighbor, India. Pakistan government test fired a medium-range missile with nuclear capabilities, but officials say it was part of a routine testing. Neighboring countries, including India, were alerted about the test beforehand.

Crews are ferrying rescue teams to the scene of Friday's powerful earthquake in northern Iran. Iranian media reports say that at least 45 people were kiled and more than 200 wounded and a helicopter carrying a governor and his entourage to the quake site crashed today, killing everyone on board.

A key figure in the Watergate hearings of the 1970s has died. Sam Dash became a household name for his probing questions about President Nixon's secret taping system. Family members say that Dash died early today after a long illness. He was 79.

Hello, everyone. And welcome to an abbreviated CNN SATURDAY LIVE and don't forget in just about 15 minutes, we will be doing "Dollar Signs." And today's topic is refinancing. Is it time that you refinance? E-mail your questions to or just call us at 1-800-807-2620, refinancing the topic, today.

In the meantime, parts of the Midwest are bracing for some difficult weather. For an update now, let's turn to Jacqui Jeras in the CNN Weather Center.

Jacqui, not again, I hope.

JACQUI JERAS, CNN METEOROLOGIST: Well, I wish I could say no, but yes, it looks like again, Catherine. This weekend very easily could rival the types of weather that we saw last weekend, if not become even worse. We've got two tornado watches that were just issued in the last half an hour or so here, and things are just getting started, here. We have a tornado watch which includes parts of South Dakota into southwestern Minnesota, northeastern Iowa, and northeastern Nebraska. Expecting thunderstorms to be developing here which may be producing super cells, the type of thunderstorms that do cause tornadoes.

And we also have a watch that was just put into effect a little bit farther on down to the south of there and it is -- does include parts of Kansas, also into Oklahoma and into northern parts of Texas. And that one has been labeled a particularly dangerous situation. We call them PDS tornado watches, and that means we may be seeing super cells in the range of F-3 to F-5 which may stay on the ground for a long period of time. So, this is just a developing situation right now, Catherine, a very high-risk of very dangerous tornadoes this evening. We'll keep you up to date all night long.

CALLAWAY: All right, Jacqui, I know you'll be there for us. Thank you very much.

Meanwhile, an oil company compound under siege. At least a dozen dead, many being held hostage, that's the situation in Khobar, Saudi Arabia, following an attack today by suspected Islamic militants and journalist Caroline Faraj is joining now on the phone. She's in Amsterdam, but has the very latest on the situation.

What can you tell us, Caroline?

CAROLINE FARAJ, CNN JOURNALIST: Well, yes indeed. The situation right now is still on hold. The Saudi forces are surrounding the whole area. They're trying basically to convince the hostage takers to release the hostages which reports are coming to us from sources that all of them are Westerners. The number had exceeded expectations, according to one of the officials in Saudi Arabia. He was telling me that they're expecting numbers like 40 or 50 people to be hostages. Regarding those who were killed, it is confirmed now that the number has exceeded also, 12 to 16 and is still expecting to count even more than this number. As we reported earlier, one of them is American and another person is British, and other nationalities including Saudis -- Catherine.

CALLAWAY: Are you hearing, Caroline, if they're close at all to settling this? What is the latest on what could happen here?

FARAJ: According to the Saudi officials up to now, they're saying that they're expecting them to basically -- to release them after all these hours that they have been kept in this building, but still the people who are there, they're still hearing sometimes instance of shooting between the Saudi forces as well as those hostage takers which they believe that they are militants very close to al- Qaeda and as what usually the Saudi officials are calling them "wanted people," but still it's not known yet because when I talk to officials they are telling me that still we don't know exactly how many are they. However, we are expecting them to be four to five who had entered from one gate, but it's been also a possibility that they entered, some other people entered from other gates which means the number has exceeded as well, more than four -- more than four people.

CALLAWAY: All right Caroline. Caroline Faraj joining us from Amsterdam on the phone for the latest on that situation in Khobar, Saudi Arabia. Thank you, Caroline. We'll continue to follow that developing story for you this afternoon.

Now in Iraq, another day of violence as a temporary government begins to take shape. And CNN's Harris Whitbeck is bringing us up to date now, on the day's events from Baghdad.


HARRIS WHITBECK, CNN CORRESPONDENT: Iyad Allawi, the man slated to become Iraq's interim prime minister spent the day in meetings with members of the Iraqi Governing Council and with U.N. Special Envoy Lakhdar Brahimi, trying to put together the new government that will take office on June 30.

Some names of cabinet members have started to remerge much of the same way the name of Allawi himself emerged Friday evening. Allawi's nomination for the post caused some confusion as it was thought it would be the U.N. Special Envoy and not the Iraqi Governing Council who would choose the new government. Allawi's ties to British and American intelligence services and his past as a former Ba'athist have raised some eyebrows, but U.S. administration officials in Iraq have praised the choice of the former exile.

Security is, of course, one of the big issues Iyad Allawi will have to face and try to tackle once he becomes Iraq's interim prime minister. Residents of Baghdad were reminded of that when two mortars were fired at the Ministry of Construction and Housing in downtown Baghdad near CPA headquarters, early Saturday morning. Four people, including two security guards were injured during the attack. And, there was more fighting in Kufa, near the holy city of Najaf, two days after radical cleric Moqtada al-Sadr pledged to withdraw his militia from the region if U.S. troops did the same. Although the U.S. said it had halted its offensive operations in the area, it said it resigned the right to self-defense and the coalition says it hopes to bolster the presence of Iraqi national police in that area, bringing it up to close to 1,000 in the weeks to come.

Harris Whitbeck, CNN, Baghdad.



CALLAWAY: We haven't forgotten about "Dollar Signs" coming, it's coming up in just about five minutes. Today, we're talking about refinancing. Is it time to refinance? Got any questions about it, e- mail us or you can just phone us, 1-800-807-2620. Again, that's all in about five minutes, so stay with us, everyone.

So, the Army is now saying that former football star Pat Tillman was probably a victim of friendly fire in Afghanistan. An investigation shows that Tillman may have been mistakenly shot by a fellow U.S. soldier during an ambush last month.


LT. GEN PHILIP R. KENSINGER, U.S. ARMY: There is an inherent danger of confusion in any fire fight, particularly when a unit is ambushed and especially under difficult light and terrain conditions which produce an environment that increases the likelihood of it of fratricide.


CALLAWAY: Tillman, an Army Ranger, walked away from a multimillion dollar football contract to enlist.

Well, graduating cadets from the U.S. Military Academy get their marching orders from the defense secretary. Donald Rumsfeld delivered a morale boosting commencement speech at West Point, today. CNN's Alina Cho looks at some of America's future soldiers.


UNIDENTIFIED FEMALE: Class of 2004, dismissed!


ALINA CHO, CNN CORRESPONDENT: The ceremonial hat toss marked the end of cadet life for these 935 men and women. They are now second lieutenants in the Army by this time next year, many could be in Iraq.

DONALD RUMSFELD, SECRETARY OF DEFENSE: In the years ahead, history may well call upon you at a critical time at a critical moment, and you will be ready.

CHO: Defense Secretary Donald Rumsfeld focused on the challenges ahead.


CHO: Twenty-five-year-old Felix Xaius was an Army Ranger before enrolling at West Point, he hopes to be serving in Iraq within 18 months.

CHO (on camera): Scared?

LT. FELIX L. XAIUS, II, NEW WEST POINT GRADUATE: I would have to say excited, respectful, but excited because-- you know, taking lives is one side of it, but saving lives is a side I tend to focus on.

CHO (voice-over): Grace Chung is this year's highest ranking cadet, only the second female in the history to hold that honor in a school with 16 percent women. She plans to be fighting for her country after flight school.

LT. GRACE CHUNG, NEW WEST POINT GRADUATE: When I do get over there, it's something that I'd like to do and that I want to do and I'm proud to do.

CHO: They started West Point in a time of peace and finished in a time of war. They were sophomores on September 11, juniors when the U.S. invaded Iraq, and seniors when the Abu Ghraib Prison scandal broke.

XAIUS: Mom, can you actually help me with the collar?

CHO: Xaius says being a leader means remembering the academy's motto: Duty, honor, country.

XAIUS: I do not blindly follow. I'm paid to think. Not just to follow. I'm not just here to pull a trigger.

CHO (on camera): Do you wonder why we pulled the trigger in Iraq?

XAIUS: I think a lot of people still wonder why we pulled the trigger. Someone has to follow up, you can't just start something and stop.

CHO (voice-over): Rumsfeld had a simple parting message for the graduates:

RUMSFELD: Serve our nation well.

CHO (on camera): As for the graduates, they will now get some much needed rest -- a 30 to 60 day break. After that, they will go for another round of training and then they will get their deployment orders and that could happen as early as nine months from now -- Catherine.

CALLAWAY: All right, thank you. Stay with us everyone, "Dollar Signs" and cents looking for some extra money to pay for a summer vacation or even pay off some debts? Refinancing your home, one way, of course, but with mortgage rates possibly rising, is that still a good option?

Here's the latest from CNNfn's Kathleen Hays.


KATHLEEN HAYS, CNN FINANCIAL NEWS ECONOMICS CORRESPONDENT (voice- over): For three years, running, Barry Habib's phone was ringing off the hook as a drop in mortgage rates to 45-year lows spurred a tidal wave of mortgage refinancing.

BARRY HABIB, C&O MORTGAGE MARKET GUIDE: It was complete lunacy because at any moment in time you'd have five or six people on hold waiting to say, please take my mortgage application because I want to refinance because rates were so low and there was such an amount of saving to be had.

HAYS: Habib says business has slowed and he's the one making the calls now because mortgage rates have turned sharply higher, from a low of 5 percent in June of last year, the 30-year fixed mortgage rate has jumped to over 6.2 percent. Habib says the refinancing tide has definitely turned, but you can still catch the wave if you try.

HABIB: Have you missed the boat? Yes, you've missed the boat but it may still make sense to refinance under certain conditions. Depends on what your objectives are.

HAYS: Here are some rules of thumb from the experts. Only consider refinancing if you can cut your mortgage rate by at least 1 full percentage point. Make sure you can recover the cost of the mortgage refinancing in two years or less, otherwise you're not saving enough money. Consider the piggy bank strategy where you refinance, not to cut your monthly payment but to get your hands on a wad of cash, money you can use to remodel, pay college tuition or maybe just pay off expensive credit card bills.

UNIDENTIFIED MALE: Last year when mortgage rates were so low, most people who refinanced did it because they wanted to obtain a lower interest rate. I think it will be a complete reversal later this year where most people who are refinancing will really be doing it for cash-out purposes.

HAYS (on camera): If cash is what you want, home equity loans can also be a great choice. The rates are still quite low and a big chunk is tax deductible. But be aware, these loans carry adjustability rates but are also expected to move higher later this year.

Kathleen Hays, CNN Financial News, New York.


CALLAWAY: So is it -- time running out for you to refinance your home? Let's talk to our guest about that, Elizabeth Jetton is president of the Financial Planning Association. She's with us here at the CNN Center in Atlanta. A.W. Pickel is president of the National Association of Mortgage Brokers, joining us today from Kansas City, Missouri. We want to thank both of you for being with us today.

So first of all, Ms. Jetton, let me ask you, what -- how do you determine if it's time for someone to refinance? What are the guidelines?

ELIZABETH JETTON, CERTIFIED FINANCIAL PLANNER: Certainly you're concerned about what their current interest rate is on their loan, if they had the opportunity as was said earlier to reduce their interest rate by at least 1 percent, then it may be a real opportunity. It also depends on how long they plan to stay in their home, what some of their other financial goals are. And that's one of the primary reasons as financial planners we encourage clients to sit down and really look at what are the other goals that they're trying to achieve.

CALLAWAY: All right, Mr. Pickel, let me ask you, is it too late for those great rates? Are we out of the fives now?

A.W. PICKEL, MORTGAGE BROKER: We're out of the fives in the 30- year fixed. But you could still get in the fives on such as a five- one ARM or a -- other products that are similar to it. But yes, you've missed the boat on the very lowest, at least as far as we can tell.

CALLAWAY: That's still not too bad though. All right, we were taking phone calls and e-mail questions. Right now on the phone with us, we have Lowell. Lowell, are you there?

CALLER: Hi, good afternoon.

CALLAWAY: Good afternoon, what is your question?

CALLER: I heard something briefly on a financial show the other day about a new type of mortgage called a cap rate float-down (ph) mortgage. So if interest rates do decline after you lock in, let's say at the present time, your interest rate will go down in the future. I wonder if anybody has heard about that yet?

CALLAWAY: You want to start with you, Ms. Jetton, what do you think, a cap rate float-down mortgage?

JETTON: I'll have to be honest, I'm not that familiar with that type of loan. But anytime you can maintain some flexibility and have an opportunity to ride rates as they go down, that's a real opportunity. My guess is there are some costs that go along with that and you still need some protection should rates go up.

CALLAWAY: All right, Mr. Pickel?

PICKEL: Sure. Have you -- is this a rate where you've already locked in, or is this a rate where you may haven't closed?

CALLER: No, I believe that it may not be locked in. It may be a rate that was prevailing at the time you close the loan, but it does have a provision to float down if interest rates decline.

PICKEL: Well, if it is a loan, there are several loan programs out there where you can actually lock in a rate and before you close, if the rate goes further down, you can actually take the lower rate. Now I don't think that will happen, quite frankly, in the next few months. There are some adjustable rate programs also where the floor of the loan is actually below where you actually lock in at, and that is possible. You would want to determine your margin and what index that loan is tied to. And that would be the best thing. And get all the facts and figures so that you can actually know how far it could go down or how far it could go up.

CALLAWAY: Now a good time to lock in some rates?

PICKEL: I think now would be a good time. I -- quite frankly, I think if you're looking to stay in a house, you know, five to seven years, look at a five-one ARM, look at an interest only product which could allow to you buy more house, if you're convinced you'll be there a long time, then you should still look at a 30-year fixed, even though the rates have gone up, they're still very, very good.

CALLAWAY: All right. Stay with us. We're going to continue to take your phone calls and your e-mail. We have two experts here on the line with us, can answer all your questions. E-mail is, phone number, 1-800-807-2620. We'll take a break, be right back.


CALLAWAY: Welcome back, everyone, to CNN LIVE SATURDAY, we are talking home finance in our DOLLAR $IGNS segment today. And with us is Elizabeth Jetton, president of the Financial Planning Association, and A.W. Pickel, president of the National Association of Mortgage Brokers. Thanks for being with us.

Mr. Pickel, I bet you get all kinds of jokes about, don't want to get you in a "Pickel" financially.

PICKEL: I do get quite a few jokes about that.

CALLAWAY: Well, we're just honored to have you both here with us because I know this is a great time to be talking about refinancing. I myself am thinking about it. I know there are thousands of people out there who are. Latisha is on the phone with us now from California, I believe, with a question, Latisha?

CALLER: Yes. Good afternoon. Thank you for taking my question. We have been thinking about doing a reverse mortgage. We are, you know, over 60 and my husband is 70-plus. And we have about $300,000 to $350,000 equity in our property, and we'd like to do a reverse- mortgage.

CALLAWAY: Mr. Pickel, you want to jump in there first? Or either one of you is fine with me. But is this a good idea, what do you think?

PICKEL: Well, there are times when a reverse mortgage can be a very good idea. For instance, I guess what I would recommend first for Latisha is to examine all the options and the consequences that -- the downside on a reverse mortgage is that once you do the mortgage, the mortgage company will actually have your house when everything's over.

It is a good way for you to get cash out of it and cash right now and not have any payments, essentially a reverse mortgage allows you to get a mortgage without making any future payments and to pull the cash out of your house. Now they're not going to loan the entire value. They'll loan a certain amount based on your age and the factors and the value of your house.

CALLAWAY: Right. Ms. Jetton, I guess family members might not like that, they wouldn't be inheriting a house, would they.

JETTON: Well, that's one concern. But I would also want to make sure that you really had looked at the alternatives, because giving up your home, the equity in your home is a really major decision. And if you have other assets and if your goal is really just to get some money out of your home, then perhaps a home equity line or even a refinance might be a better alternative. So I'd be very careful and really look at the alternatives before you make that decision.

CALLAWAY: Let me ask you this quick question. I think most people want to know this. Is there a rule of thumb about when and when you should not refinance? Ms. Jetton, let's ask you. Is it if you're going to lose a point, two points? What should you consider?

JETTON: Well, there's a number of factors even beyond whether or not you're going to save money on the payment. It also has to do with how much longer you have on the mortgage that you're currently holding. If you have only five to 10 years left on your mortgage and you were to refinance and get a new 30-year mortgage, you're not going to save money at all. In fact, it's going to cost you a great deal more because you'll be making payments for so many more years.

So we look to see how long someone has left on their mortgage, certainly how much they're going to save. But we also have to keep in mind that there are costs associated with refinancing. And so unless you're planning on staying in your home for at least several years, it generally may not make sense.

CALLAWAY: All right. We'll probably get back to that in just a moment, but first, let's go to Don, he's on the phone with us from Massachusetts. Don, what's your question?

CALLER: Yes, I have a buy saver program. And with the buy saver program, I've had it for some years, I make actually three extra payments per year. And originally, I had a 30-year mortgage, now I've paid it back to about nine years. My rate is 7.125. Does it make sense for me at all to refinance at this point in time if I have only nine years left?

CALLAWAY: Mr. Pickel, go ahead and address that if you could.

PICKEL: Sure. I don't think it really would, quite frankly. If you have nine years left, the only mortgage I think that would do you well if you're totally interested in paying off your house quicker, is to do a 10-year mortgage. Now, if the 10-year rate would be significantly lower and it would lower your payment and you look at the savings over the 10-year time frame, in other words, look at how much it's going to cost you over the next nine years for that mortgage that you have left, and if you were to get a new mortgage and incur the cost and what it would cost you over the 10 years.

But I think you might be money ahead just to take the money you would put into closing costs, put that against your principal and continue to pay your mortgage ahead.

CALLAWAY: All right. We're going to take a break here. But before we go to break, quickly, if you could tell us, when are we going to see these rates go up? There is a lot of talk out here. But -- that's the million-dollar question, I know. But what is your opinion on that? Let's start with you, Ms. Jetton.

JETTON: Well, I don't know that my crystal ball is better than anyone else's, but we've already seen rates go up a whole percentage point in the last 12 months. So I think we'll see that trend continue. I don't think it will be a dramatic increase very quickly, but I certainly think you'll see rates on the rise.

CALLAWAY: And you, Mr. Pickel.

PICKEL: Well, you've already seen rates go up by just -- before I came here today, I checked my office and you've seen them go up 2.25 and 3/8 since April 28. I think you'll continue to see them rise a little bit through the summer months. A lot depends on what happens in our economy. If our economy continues to heat up, you'll see the Federal Reserve act on short-term rates which will cause long-term rates to go up. I would look for probably 6.75 to 7 percent by the end of the year.

CALLAWAY: You know, but that's not bad. I don't want viewers to fret. I remember when it was 14 percent out there. We've got to take a break, so stay with us, everyone. We're going to take your phone calls and read your e-mail questions out there. Here's the number, 1- 800-807-2620, is the e-mail address. Questions on refinance. Stay with us, everyone, back in a minute.


CALLAWAY: Welcome back to CNN LIVE SATURDAY. We are answering your calls and your e-mails about home refinancing in our DOLLAR $IGNS segment. And back with us is Elizabeth Jetton who is president of the Financial Planning Association, and A.W. Pickel, president of the National Association of Mortgage Brokers. Thanks for staying with us in this half hour. We actually have a phone call now from Larry (sic) who's in New Jersey, I believe. Jerry (sic), what's your question?

CALLER: Hi. After watching your program, I think I might have changed my mind on something I was going to do. I'm going to be coming into some money, about $80,000, which is enough to pay off my mortgage right now. My mortgage, I refinanced earlier this year. I got 6.2 percent. I also have a home equity loan attached to that at 4.2, but it's variable. I have a fixed 30-rate.

OK. Now, I want to build onto the house which is going to cost me roughly that same $80,000. Would I be better in leaving the mortgage the way it is and rebuilding or expanding my house with the $80,000 cash that I have, rather than pay off the mortgage and then use a home equity loan to build because then I'll be dealing with a 4.2 percent variable rate whereas that same $80,000 is tied up in a fixed 6.2 rate? Follow me?



CALLAWAY: We have a diagram if you'll stay with us, Larry, try to figure that one out. You know, is cash-out refinancing a good idea, Ms. Jetton, what would you advise him to do if you were his financial adviser?

JETTON: Well, without knowing a lot of other circumstances, it can certainly be a wonderful tool. I like to have flexibility on behalf of my clients. And so if you take the money out and as opposed to refinancing the entire mortgage, you've got the ability to make the addition, pay off the loan as quickly as you want to, have the advantage of the low rate as it is today. I like to see people invest their money, obviously.

I think with rates as low as they are, you might do better to invest that $80,000 over a period of time. And go ahead and borrow the money to do the addition on the house. But being very conscious of setting a goal of paying that off over a fairly short period of time if you can.

CALLAWAY: Mr. Pickel, quickly, because I want to get another question in, but what would you advise and is it a better idea to invest that money?

PICKEL: Well, one of the first questions I would ask is how long does he intend to stay in the house? And if he intends to stay in the house for a long time, then I would probably borrow against the house, fix it up and kind of be done with it at one time, because he could still lock in a very good interest rate in the sixes and then he wouldn't be worried in the future about what's going to happen with the Heloc (ph). If he plans on being in the house a short time, I'd go ahead, pay for the work, sell it, take the equity out later on down the road.

CALLAWAY: OK. All right. Quickly, Eleanora, are you still there, from Texas?


CALLAWAY: What is your question and do it rather fast if you could.

CALLER: OK. I will. What is your thoughts on interest-only loan on either refinancing or buying a new home and then putting the money that you would apply -- would have applied to the principal in a money market or a savings account or something to apply it some time later?

CALLAWAY: Mr. Pickel, you start this, please.

PICKEL: Yes. I'll tell you what I would do. If you feel like an interest only enables you to do what you want and you're not afraid of -- remember your principal is going to remain the same. And so you would like to think that in four to five years, that house is going to be worth a lot more money. So therefore, you can do something like that. I'd want to look at all the conditions.

I'd want to deal with a reputable mortgage broker so that I could look at both sides of that coin. If you don't think your income is going to go up and interest only is really good for someone who is making very good money, in my opinion, and therefore can afford, in case their house doesn't appreciate, they're going to owe the same amount when it comes time to sell it.

CALLAWAY: Right, that's a good point. You want to add to that, Ms. Jetton? JETTON: Well, I would just say, you never want to do an interest-only if that's the only way you can afford the house that you're looking at.

CALLAWAY: Yes, that's a good point. I wanted to ask one quick question because I think a lot of people are refinancing right now, either they want to upgrade or they just want a better rate. Aren't there a lot more hidden costs than there used to be? I'm hearing all kinds of horror stories. When they go to sign the line, banks are getting very creative. What is your advice to people on that, Mr. Pickel?

PICKEL: Well, actually, the costs, believe it or not, have gone down, due to, I think, Fannie Mae and Freddie Mac and they're driving technology forward. The mortgage brokers and mortgage bankers today driving technology forward. Appraisals have come down in cost actually over the past four to five years, so have credit reports and those fees.

CALLAWAY: That's interesting.

PICKEL: I think sometimes what people include in closing costs is the amount of money that you pay to buy down a rate. That's why it's always, I believe, a good idea to ask for costs in writing. To find out how long a lock-in is good for and ask it to be guaranteed for a certain amount of time, and find out what -- when they quote you a rate, how long is it good for. And I would say deal with a reputable mortgage broker, and you can find those on our Web site.

CALLAWAY: Ms. Jetton, I'll give you the last 30 seconds.

JETTON: Well, I would suggest that there's no such thing as a free ride. And you can find what is advertised as a no-cost refinancing but they've either built the cost into the loan itself or they've increased the interest rate. So if it's too good to be true, it is too good to be true.

CALLAWAY: Great advice. Elizabeth Jetton and A.W. Pickel. Thank you very much for being with us on this holiday weekend, some great advice out there for everyone. And that's all the time we have.

PEOPLE IN THE NEWS coming up next. Today's profile is Tom Hanks and Billy Graham.

Then coming up at 6 Eastern time on CNN LIVE SATURDAY, can you live without running water or electricity? I can't. Well, that's what some families are doing by choice. You'll hear from the director of PBS's new show, "Colonial House."

Then coming up at 7:00, THE CAPITAL GANG. Tonight's topic, Iraq policy under fire.

I'll be back after a quick break with today's top stories.


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