September Roundup Interest Rates After bouncing around for much of the month, mortgage rates are on the upswing as September draws to a close. The average price for a 30-year fixed-rate loan was 5.8 percent as of Sept. 22, according to the latest survey by Freddie Mac, a major provider of funds for mortgages. The week before, the average cost of this most popular of all mortgage products was 5.74 percent. For all the talk over the last few months about rates heading higher, the rate is now just 10 basis points higher than it was at the same time a year ago. A basis point is 1/100th of 1 percent. So 10 basis points is 1/10th of a percent, meaning that the difference in rates between last year and now is hardly a blip. Still, Freddie Mac chief economist, Frank Nothaft, says rates "look like they are back on track with where the Fed wants them, which is gradually rising." The cost of other loan products also is increasing. On average, the rate on a 15-year fixed loan was 5.37 percent, up from 5.32 percent the week before. A five-year adjustable rate mortgage was 5.31 percent, up from 5.26 percent, and the rate on a one-year ARM was 4.48 percent, up from 4.46 percent. Incidentally, lenders typically were charging less than 1 point on all of these mortgages. Points is the fee lenders charge to boost their yields. A point is 1 percent of the loan amount. Check Your HomeOwners' Coverage If there is anything "good" that has come of Hurricane Katrina, it's that it has sent millions of home owners scurrying to determine if they have enough insurance coverage should a major catastrophe strike in their neck of the woods. According to Marshall & Swift, an expert in building costs, nearly six out of every ten homes in Louisiana are underinsured. Similarly, the Los Angeles-based firm says almost 60 percent of all houses in the United States are not valued properly when it comes to insurance coverage -- by a whopping 22 percent, on average! If that's not enough to cause every owner in America to re-evaluate their policies, I don't know what is. Indeed, it is your responsibility, the not your insurance agent's, to remain up-to-date on your coverage. What's appropriate? You want to be able to completely rebuild your house if it is destroyed, and you'll want to be able to replace everything in it. Also, you'll want to be covered for additional living expenses if you cannot occupy your home as a result of the disaster. And while you're at it, you'll want enough liability coverage to protect yourself should someone be injured while on your property. Many agents nowadays use a square footage methodology to determine replacement costs, but Marshall& Swift, which has been estimating construction costs for 75 years, says using a total component formula is better. Such a system uses databases to analyze and select detailed parts of a house to assemble estimates in a risk-specific manner. For $19.95, the company has a web based program that can calculate a replacement cost estimate based on the unique characteristics of your home, local building codes and local labor and material costs. The estimate is designed to help owners discuss their policy limits and coverage with their agents when reviewing their policies. ‘Flippers' Do Well -- If ... Have you ever wondered how good those guys do who buy houses for quick resale? Well, as it turns out, they do better than most -- better, that is, if they sell within three to six months of purchasing a place. Ninety-to-180 days is the "sweet spot of flipping," according to a new report by First American Residential Solutions, one of the country's largest providers of property data. Hold a house any shorter or longer than that and you won't do nearly as well. We're talking about true, legitimate investors here, not scam artists who use false information to buy a house. People who purchase distressed or undervalued properties, raise their value by making repairs or even remodeling or simply taking advantage of a hot and getting-hotter housing market. Flipping is highly speculative, to be sure. But the study found that the smart ones ride the wave of a rising market and profit from it. If they sell too quickly, however, or if they hold too long, they don't do as well as they could if they put their purchases back on the market at just the right time. The study of three super-heated markets -- Orange County, Calif.; Miami-Dade County, Fla., and Clark (Las Vegas) County, Nev. -- found that the annual rate of return for flippers who sold after holding a property for 12 to 24-months was just a little above or a little below the rate for the market as a whole. The rate of return for a 6 to 12-month hold tended to be a little better than the entire market. But the gain realized in the three to six-month category, which represents almost an immediate turnaround as far as real estate is concerned, was usually 20 to 40 percent or more ahead of the market. The study calls this time-frame the "sweet spot of flipping," and said that when they market in the three towns was booming, flippers who found the G-spot of real estate "reaped almost incredible returns." Say "Boo!" If you are thinking of getting away at the end of the month and still want to get into the Halloween spirit, consider these spots in North Carolina: Transylvania County, Pumpkin Center or Cape Fear. If not the Tarheel State, than how about Pumpkin Bend, Ark., Skull Creek, Neb., or everybody's favorite Halloween haunt, Tombstone, Ariz.? These aren't big places -- Tombstone's population is only 1,560 -- but they should be a hoot. For what it's worth, the Census Bureau estimates there are 36.4 million potential trick-or-treaters this year. That's the number of 5 to 13-year-olds nationwide. But of course, many teens and tots also go door-to-door asking for goodies. And the pickin's ought to be pretty good -- there's almost three times as many houses occupied year-round --106 million -- as there are kids. Also of interest: The United States produces 998 million pounds of pumpkins every year, with Illinois responsible for nearly half the total. California is the leader as far as chocolate and confectionary production is concerned. And finally, Americans consumer an average of 25 pounds of candy a year, most of it around this time of year. Happy Halloween! | 
