Originally created 01/13/02

Pocket change

Mortgage rates dip again

WASHINGTON - Rates for 30-year and 15-year mortgages dipped this week, while rates for one-year adjustable mortgages were unchanged.

The average interest rate on 30-year fixed-rate mortgages edged down to 7.06 percent, from 7.14 percent last week, according to a nationwide survey released Thursday by Freddie Mac, the mortgage company.

Fifteen-year mortgages, a popular option for refinancing, slipped to 6.55 percent this week from 6.62 percent the week before.

A year ago, rates for 30-year mortgages averaged 6.89 percent, and rates for 15-year mortgages averaged 6.49 percent.

On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.26 percent. Last year at this time, ARMs stood at 6.65 percent.

Retirement benefits

As part of the $1.35 trillion tax cut President Bush signed in June, taxpayers saving for retirement stand to benefit from two changes:

  • The maximum amount of pre-tax dollars you can put in your company's 401(k) retirement plan or similar program jumped from $10,500 last year to $11,000 now for workers under 50. Workers who turn 50 or older in 2002 can save $12,000. One catch is that employers aren't required to take the stepped-up contributions, so check now to see if you can increase the contribution withheld from your paycheck and plan accordingly.
  • Annual contribution limits for traditional, tax-sheltered individual retirement accounts or Roth IRAs, which let after-tax dollars grow tax-free, rose from the $2,000-a-year limit for 2001 to $3,000 for 2002 for savers under 50. The catch-up contribution for taxpayers 50 and older raises the IRA limit to $3,500 this year.

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