Use line of credit, home equity loan to pay off costly timeshare

Question: My partner and I purchased a timeshare in June 2005, and we love having it. However, at the time of purchase, the interest rate was (and still is) 17.9 percent. Can we refinance a timeshare? If not, what would be your suggestion to drastically reduce this rate?

Answer: If you own your own house, and you have any equity built up, you might want to take out the equity and use it to pay off the timeshare loan. You'd do this with a home equity loan or home equity line of credit.

A home equity line of credit or home equity loan would cost you anywhere from 6.5 percent to 9 percent, but that's a lot less than what you're paying now.

If you don't own your own home, you need to look into taking out a personal loan. Unfortunately, I think you wouldn't do much better interest-rate-wise on such a loan.

Q: My husband and I are first-time buyers and we're looking at a house nearing completion. Our agent is telling us we can't negotiate the list price of this home. Is that true?

Also, this builder is not one of the mainstream builders. In fact, our agent, who has been in this area 25 years, says she had never heard of him. How do we find out more about this builder, as the company has only built one other house in the neighborhood?

A: New construction builders don't like to cut the price on their homes. But, when negotiating, they often are willing to upgrade carpet and paint, or even tile and appliances. Your broker should know this, and perhaps has tried to counsel you on how to negotiate and what kind of luck you might have.

Typically, builders like to sell homes that are under construction because it allows the buyer to add personal touches, such as choosing tile, carpet and paint colors, but also because it means that when the house is done, it will be sold and the builder won't have extra carrying costs.

Although you've selected a builder who's little known in the community, you should be able to find out about his work. Ask for the names of five to six owners whose houses he built over the past one to five years. Visit these owners and ask them how they like living in the property.

Ask if they have had any problems with their houses, and if the builder came back to make repairs. Ask what they don't like about their homes and what, if anything, hasn't worn well.

When you work with a builder who doesn't have a long track record, you take on quite a bit of risk. You should have a professional home inspector look at the property when the walls have been put up, before the walls have been closed in, and before you close. Also, make sure you'll have an escrow account for holdbacks if something isn't finished before you move in (like landscaping). You should negotiate the punch list ahead of time and make sure it becomes part of your final contract.

Hire a real estate attorney to go through the builder's contract and make sure you're protected. And work with your agent to be sure you aren't overpaying for the house.

If you do all your homework, you ought to be OK. The biggest mistake would be to simply sign documents without doing due diligence.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.