DEAR BOB: I read in the newspaper that mortgage interest rates are coming down. However, a realty agent told me that it is still hard to qualify for a regular mortgage or a VA or FHA loan. Two questions: (1) Do you think mortgage interest rates will drop much more? (2) What is the "best deal" now on home mortgages? Nathan M., Chevy Chase

DEAR NATHAN: Your agent is correct that it is still difficult for most potential home buyers to qualify for a new mortgage. Interest rates around 12 percent are still too high for most buyers; FHA and VA rates for 11.5 percent aren't much better.

The problem with FHA and VA loans is the loan fee the lenders require. For example, the FHA and VA loan fees currently range from 3 to 5 points (that means 3 to 5 percent of the amount borrowed) in most communities.

Since the law prohibits FHA and VA buyers from paying such loan fees, and many sellers refuse to pay their buyer's loan fee, this rules out FHA and VA mortgages for many used homes. However, home builders often structure such loan fees into their sales price so you'll usually find new homes are the best candidates for VA and FHA loans.

(1) I don't know if mortgage interest rates will drop much more. Some mortgage lenders are short of funds now so they hesitate to drop interest rates. The situation varies widely among lenders. Those that have excess funds may lead the way to lower rates. Shop carefully for the best rates.

(2) The "best deal" on home mortgages continues to be seller financing. Many home sellers, especially retirees, realize an investment in a mortgage on their former home can be very profitable. Where else can a home seller lock in today's high interest rates except on a mortgage secured by their former home? In addition, installment sale tax benefits are available on such loans. h

Don't let today's interest rates stop you from buying. Prices will skyrocket when and if mortgage interest rates drop. But if you buy now, with seller financing, you will have bought at today's prices with financing not available elsewhere.

DEAR BOB: Thank you for your splendid article on the new estate tax law. It's good to know that my children will inherit my properties at the market value with no capital gain tax to pay. You said that property is appraised at death at its value for current use. Since I rent my property at a low rent to a long-time tenant, will this mean a lower appraisal? Mavis M., Alexandria.

DEAR MAVIS: The 1980 Windfall Oil Profits Tax Law says persons inheriting property receive it with a basis of its market value on the date of death (or alternative date if elected by the estate executor). This means your property will be valued at its current use, not its potential use.

Suppose your property is used as a farm. It will be valued as a farm, for example, rather than a higher value as a potential housing subdivision tract. That's what the law means by valuation for current rather than potential use.

DEAR BOB: In a recent article you said real estate agents often advise people to take title in joint tenancy. You said: "Remember, the realty agent or title officer is anxious to get the sale closed. They could care less about the tax consequences of how you hold title." As a Realtor, I think you are speaking in generalities as such a statement is not true of conscientious real estate professionals. I believe the person to be consulted in such a situation is the tax expert, such as a CPA. John S., Arlington.

DEAR JOHN: You are absolutely correct. Buyers should consult a tax specialist, rather than a real estate agent or title officer, about the best way to hold title to real estate.

DEAR BOB: I understanad the "residence replacement rule" says I must defer paying profit tax when I sell my home and buy a more expensive replacement. What happens when I die? Do my heirs have to pay the tax on those deferred profits? I wouldn't want to leave them with that burden. Mo M., Annapolis.

DEAR MO: Deferred profit taxes are forgiven at death. In other words, if you used the "residence replacement rule" of Internal Revenue Code section 1034 to defer your profit taxes, when you die still owning the replacement principal residence, the tax deferral is wiped out. Your heirs receive the property at its market value on the date of your death (or alternative date if elected by your executor).

For example, suppose your home has an adjusted cost basis to you of $40,000. When you die it is worth $100,000. This is the basis your heir will have for it. If he later sells it for $110,000, he pays tax only on his $10,000 profit. But the $60,000 difference between your $40,000 cost basis and the $100,000 value on the date of death escapes tax. Ask your tax adviser to explain further.

DEAR BOB: Do you have a checklist of things to look for when buying a home? We are first-time home buyers who are worried we'll make a bad buy. Marlis A., Bethesda.

DEAR MARLIS: Fortunately, real estate is a forgiving investment. If you should make a "bad buy," inflation will probably bail you out. But to prevent making a mistake, here are the most important home buying considerations.

1. Neighborhood. Before buying any home, inspect at least 10 in various locations throughout your community. Of course, don't waste your time looking at $200,000 homes when your budget can afford only a $75,000 home. Buy in a stable or improving neighborhood, never in a declining one. Also, be sure the particular house doesn't have incurable location defects such as freeways.

2. School quality. Never buy in an area where the schools are bad. If you buy in an area with bad public schools, middle-class families won't buy a home there, thus limiting your resale market to singles and people without schoolage children.

3. Financing. Before you inspect a house, ask the realty agent "What financing is available on this house?" In today's market, try to find a home where the seller will carry all or most of the financing. This is far cheaper than getting a new mortgage at a bank or savings association.

Many shrewd agents won't even show listings where the seller wants an all-cash sale requiring a new mortgage because so few buyers can qualify for new mortgages at today's interest rates.

4. Physical condition. Unless you or your husband are construction experts, provide in your purchase offer for an inspection clause. In termite-infested areas, insist on a termite inspection report, with the seller to pay for any necessary repairs.

Better yet, include an offer contingency such as "This offer contingent on buyer's inspection and approval of the property." Hire a professional inspector if you have doubts. Also try to get the seller to pay for a one-year home warranty (available through your real estate agent) for repairs to appliances, plumbing, wiring and furnace.

DEAR BOB: We are in the market for a new home. In the newspaper we saw ads for new homes where the mortgage interest rates ranged from less than 10 percent to 13 percent. I understand the "going rate" is between 11 and 12 percent. Why the wide variation? Fred T., Laurel.

DEAR FRED: New home builders usually "buy" mortgage loan commitments from mortgage lenders. To get a firm interest rate, the builder pays the lenders a loan fee.

For each one point (1 percent of the loan amount) paid, the lender's yield is usually increased about 1/8 percent. As you can see, if the lender pays a big enough loan fee, he can get his loan commitment down below the competition. Of course, this loan fee is hidden in the sales price of the home.

A tactic being used by some builders who have high interest rate loan commitments is to pay part of the buyer's first several years interest at the higher interest rate.

For example, if a builder has a 13 percent interest rate commitment, he may offer to pay the buyer 2 percent for two years, thus bringing the interest rate down to 11 percent. But I'm sure you can see that this is a "bad deal" for the buyer, who has to pay 13 percent interest after the firt two years.

Although many home builders won't negotiate on the sales price of their new homes, today you'll find that some will negotiate on the terms, especially if the project isn't selling well. You've got everything to gain and nothing to lose by negotiating on a new home just as you would on a resale house.