National guard, other military personnel eligible for debt help

A federal law puts an interest-rate cap on most of the debt owed by military personnel who are on active duty.

Q. My husband is in the National Guard and is on active duty in Iraq. He's been overseas for four months, and our family's finances are really hurting. Is it true that National Guard members qualify for special debt-reduction help?A. Yes, if certain conditions are met.The federal Servicemembers Civil Relief Act of 2003 caps the interest rate on home loans, credit cards and most other types of debt at 6 percent for nearly all servicemen and women while they are on active duty. This includes members of the National Guard and National Reserve, as well as career military personnel.To be eligible, the debt must have been incurred before the solider or sailor began active duty, and the military stint must affect the borrower's ability to repay. Those aren't difficult requirements for most guardsmen and reservists to meet, because they typically must leave a higher-paying civilian job when they are called up by Uncle Sam.Mortgages, credit cards and other debt taken out jointly with a non-military spouse are eligible for the interest-rate cap.For more information, visit the Defense Department's Armed Forces Legal Assistance Internet site at legalassistance.law.af.mil. The site even has sample letters service personnel can send to their creditors in order to request an interest-rate reduction.Another good source of information is the site operated by the nonprofit Reserve Officers Association, www.roa.org.What does it mean when a mortgage loan is advertised "at par"?A. A par rate is the rate on a loan to a borrower who does not want to pay any upfront points. A point is prepaid interest, with each point being equal to 1 percent of the total loan amount.For example, one nationwide lender recently was offering 30-year loans at 4.4 percent to borrowers who were willing to pay one point in advance. The par rate for a loan that involved no points was a bit higher, at 4.72 percent.We are planning to put our home up for sale, but it needs about $13,000 in repairs. Would it make sense to simply sell the home at a discounted "as is" price rather than spending the time and money to fix it up?A. It probably would be better to fix up the place before listing it for sale.There are so many homes on the market now that buyers can afford to be finicky, and many won't even bother looking at a property if it's not in tiptop shape. Even buyers who are willing to consider a fixer-upper will demand an unusually steep discount - probably much larger than the $13,000 you would need to put the house back into mint condition.It's also worth noting that many homeowners mistakenly believe that selling their property as is prevents them from being sued if a buyer moves in but then discovers problems. In reality, it simply means that the property is being sold in its current condition and the seller will not vouch for its soundness.Sellers and their agents must always disclose any known defects, even if the home is offered on an as-is basis. You'll be courting a lawsuit if you sell the home without telling prospective buyers about its physical shortcomings.I would like to refinance my home. I have a lot of equity in the property, but there is also an $8,900 lien on it that was placed by the Internal Revenue Service for back taxes. I plan to appeal the IRS ruling, but it will take a long time. Can I refinance the mortgage without paying off the lien?A. Probably not. Tax liens usually take priority over any other type of lien on a home, including a first mortgage. So, it's doubtful that you can find a lender to refinance the loan without requiring that the tax lien be paid off first.If you don't have the cash needed to pay off the lien, you can tap your equity to have the bill paid as part of the refinancing process. Essentially, the lender would earmark $8,900 of the proceeds for a check that would be sent to the IRS automatically and add the amount to the balance of your new mortgage.If you eventually win your appeal, the IRS would send you a check for the judgment.bull; For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.#169; 2010, Cowles Syndicate Inc.