While mortgage interest rates are falling dramatically, lenders also are finding it lucrative to offer relative bargains on home equity loans. In some competitive markets, you can find interest rates well below the prime rate, which has been stuck at 8.5 percent for eons.

You may be able to find a rate close to 7 percent for a home equity loan with a very short term - three to five years. These loans come in handy for an expense that you can't quite cover but will be able to pay off quickly.For instance, you desperately want to refurbish the living and dining room for the upcoming holidays but the $10,000 price tag is out of reach. If you use a store's credit card, the interest rate is likely to be a staggering 21 percent or even more. The furniture and rugs probably would be worn out by the time you paid off the debt at that interest rate.

If you can get a home equity loan with a five-year term at 7 percent interest, the payments would be just $198 a month. At 7.5 percent, the payment would be $200 a month - hardly any different because of the relatively small amount owed.

It's always good to remember that a home equity loan carries the same risks as a primary mortgage. If you fall behind on the payments, you may lose your house. On the other hand, you're likely to get out of debt in much better shape with a home equity loan than with a department store credit card.

Do your own figuring online with the loan calculator at www.hsh.com run by HSH Associates, a mortgage information firm.

While the mortgage industry is moving toward automated underwriting, wherein a very smart machine evaluates your mortgage application, you may find your own lender doing things the old-fashioned way - with humans. The reason? Money.

"With costs being a major factor, the number of companies implementing the new technology is still small," says William Kugel of GMAC Mortgage, writing in the trade paper Market Commentary.

Computer evaluations can speed up your loan considerably if you have good credit and fall into the routine borrower category. But unusual or marginal borrowers are still often evaluated by people in a time-consuming process even when the lender has automated underwriting.

A column on how foolish it is to pay a lender $300 for the privilege of making extra payments on your mortgage when you can do it for free prompted a response from a Phoenix bank.

Bank One says it has eliminated its own $295 enrollment fee for biweekly mortgage payments and dropped hefty monthly charges as well. It now charges just $26 a year for the service - $1 for each biweekly payment. The program is available to "virtually anyone who has a mortgage," the company says, and you don't have to switch lenders to participate.

I'm not familiar with this bank, but this sounds like a much better deal than most if you don't want to make the payments on your own for free. Get information at 800-400-4402.

Mortgage offices are still full of refinance applications. The Mortgage Bankers Association reported refinancing accounted for 55 percent of applications on Sept. 11, up from 52 percent the week before.