Q: In response to a question, you recently said not to go to a mortgage broker for pre-approval because only the actual lender can pre-approve loans. As a mortgage broker, I am now able to receive pre-approvals direct from many lenders. Also, you mentioned the tough Fannie Mae-Freddie Mac guidelines. A mortgage broker who phones their underwriter will learn these are just guidelines and there is great leeway. I have closed 90 percent loan-to-value mortgages where as high as 38 percent of income goes for mortgage payments and 41 percent for all household debts. This is far above the 28/33 guideline ratios. Borrowers need to find a loan officer who believes in their ability to afford a home and will fight to get them a loan. Mortgage brokers offer the advantage of being able to offer a great variety of loan products.

A: Thank you for emphasizing most mortgage brokers can now obtain borrower pre-approval from the actual lender. That is very important because pre-qualification from a mortgage broker is not a loan commitment. Borrowers should get their lender mortgage pre-approval in writing and read conditions carefully.

(COPYRIGHT, 1994, TRIBUNE MEDIA SERVICES INC.)

I 've been reading in the newspaper that home loan interest rates have come down to around 9 percent on fixed rate mortgages. We have a 10.25 percent rate on our current mortgage. Do you think now would be a good time to refinance and take out some equity to pay for remodeling? A The general rule for refinancing home loans is it pays to refinance when you can reduce your interest rate at least 2 percent and repay loan costs from payment savings within 36 months.

But every rule has its exceptions. For example, even though they won't reduce their interest rate by 2 percent, many people are now refinancing with fixed-rate home loans to get rid of their adjustable-rate mortgages. Another good reason for refinancing is to take out tax-free cash for worthwhile purposes, such as remodeling.

Depending on the amount of your mortgage and costs of refinancing, you can probably save enough interest to come pretty close to meeting the guidelines. However, some conservative lenders won't refinance for more than the amount of the old mortgage, so you might have to shop around to find a lender who will let you take out cash from your equity to pay for home improvements. Incidentally, an excellent new book to read is "The Mortgage Kit (Second Edition)" by Thomas C. Steinmetz (Dearborn Publishing Co., Chicago). Q About three years ago we sold our home and carried back a $22,000 second mortgage for the buyers. They were always slow pay, but about seven months ago they stopped paying. When I inquired, they were very rude and told me to "get lost." I have written them several times since then, but no payments or response has resulted. How long should I wait before beginning foreclosure? A You have already waited too long. Unless there is a good reason for non-payment, foreclosure should be begun promptly within 30 to 60 days after a borrower misses a mortgage payment. The longer the lender waits, the more "free rent" the borrower gets while the lender suffers.

As a lender, you shouldn't fear foreclosure. Welcome it as an opportunity to either get your loan paid off at the foreclosure auction or, if there are no bidders, get the house back to sell again for a second profit. Q I saw one of those little legal ads in a newspaper about a foreclosure sale. I made a few phone calls and located the owner of the house being foreclosed. He was going to lose the house at a foreclosure sale in a few weeks, so I offered him $5,000 for a quit claim deed to the house. He accepted. Then I paid off the second mortgage of about $8,500 and took over paying the FHA first mortgage. The seller and his family will continue living in the house as my tenants, so his kids can go to the same school. As I figure it, I bought the house for about $35,000 below its market value. Do I have to pay any tax on this profit? A No. Congratulations on your first venture into the world of foreclosure profits. Just think how much money you could earn if you knew what you are doing.

At the time of purchasing the property for below its market value you have no tax consequence. However, when you eventually sell the home, then your profit becomes taxable. Until then, enjoy your profitable investment. Q Our home has been listed for sale almost nine months. Last week we finally received a purchase offer. But it is a little strange. The buyer is offering us for the down payment $15,000 in cash plus a $36,000 second mortgage on a home he sold last year in a nearby town. He says the buyer makes payments on time each month. We are tempted to accept this offer which is close to our asking price. But how can we check up on this second mortgage to (1) be sure it really is a second mortgage and (2) the buyer is making his payments on time? A You can get the title insurance policy on the second mortgage assigned to you, usually for little or no charge. This title policy is your best assurance of the second mortgage's status. In addition, be sure to contact the borrower to verify the terms of the mortgage, its balance and the date of the last payment. Accepting that second mortgage for part of the down payment can solve problems for both you and your buyer. Q After reading your articles about Starker delayed tax-deferred exchanges, I did one about eight months ago. It was simple. We sold our six-unit apartment building, had the sales proceeds held by our bank's trust department, and then bought a commercial building with the money. Now we have fixed up the commercial building and have a buyer for it. But we don't want to sell if we have to pay a large profit tax. Can we do another Starker delayed exchange or is there a limit on frequency of such trades? Our realty agent thinks there is a 24-month time limit, but isn't sure. A The good news is your real estate agent is wrong. Internal Revenue Code 1031(a)(3) has no limitations on the number or the frequency for Starker delayed tax-deferred exchanges. Nor are there any limitations on the timing of Starker delayed exchanges except you have 45 days after the transfer of your old investment or business property to designate the "like kind" property to be acquired within 180 days.

(Copyright 1991, Tribune Media Services Inc.) Bob Bruss' column appears Sundays in the Home/Real Estate section of The Times. Letters and comments should be sent to Bob Bruss, Seattle Times Newsroom, P.O. Box 70, Seattle, WA 98111.