Homebuyers Getting a Break on Loan Costs.

Access to mortgages continues to improve. That's true both for first-time buyers seeking modest homes and for buyers of bigger houses with larger loans. Two changes take effect this month.

First, it will be cheaper to get a government-insured loan backed by the Federal Housing Administration. Second, many of you will be able to get a larger mortgage at normal interest rates, rather than pay the higher rates that are usually charged for "jumbo" loans.

When you take an FHA loan, you pay a premium up front to cover the cost of insurance. The insurance repays the private lender if you default. The FHA has been charging most borrowers a premium of 2.25 percent. That cost is being cut. For loans closed in 2001, all borrowers will pay just 1.5 percent up front.

Now, on to the new possibilities for people buying or refinancing expensive homes. Mortgages come in two sizes, "conventional" and "jumbo." Most loans are conventional -- meaning that they don't exceed a certain amount. Almost every year, that amount goes up, reflecting the average home-sale price for the previous year.

In 2001, the size loan considered "conventional" is taking a big jump -- loans closing this year can be as large as $275,000 on a single-family home and still get conventional rates.

For those seeking much lower payments, some 25 lenders are promoting a new "shared appreciation mortgage," or SAM. You get a lower interest rate in return for giving the lender a piece of your profits when you repay the loan. How much profit you give up depends on how low you want the interest rate to be. A 5.75 percent mortgage might cost you 60 percent of your appreciation.

But ask yourself: Would lenders offer this deal if they thought they were going to lose? On average, borrowers will pay the equivalent of the conventional interest rate, or more.