Can you refi when you're upside down?
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With people walking away from their houses in droves, and with foreclosure rates rising quickly, would you approve that loan? You wouldn't, if you wanted to keep your job.

You think the appraiser is wrong? It's human nature to believe that your house is worth more than a neutral party thinks it's worth. That doesn't mean you're correct, only that you're human.

The solution to this problem is to put up more cash, if you can. If you're buying, you'll have to make a bigger down payment (or talk the seller into dropping the price). If you're refinancing, you'll have to pay the difference between the current loan balance and what the refinancing bank is willing to lend.

In the last of the questions above, the homeowner says Wells Fargo will refi the mortgage if he comes up with $25,000. Many would-be refinancers are going to be presented with that ultimatum. And, like that reader, some borrowers will reply with an ultimatum of their own: Refi the loan anyway, or I'll stop paying and mail in the keys. That action will result in foreclosure, and foreclosure should be a last resort. To walk away from a mortgage in a temper tantrum is self-destructive behavior at its worst.

If you're pretty sure that you're going to end up in foreclosure, I strongly suggest consulting an attorney, even if it's a relatively inexpensive one-hour conversation. The attorney will talk you out of doing anything stupid. Avoid foreclosure if you can.

What are the potential problems with qualifying?
Q: My current rate on my 30-year fixed-rate mortgage (maturity date is 2034) is 5.625 percent. Should I try for lower? Right now I am unemployed, so I assume this could cause a problem.

Will you save by refinancing? Current monthly payment: Current interest rate: Balance left on mortgage:

Holden Lewis: Unemployment definitely is a problem. During the decadent latter days of the mortgage frenzy, about a year ago, a creature dubbed the NINJA crawled out of the muck. That was a loan that didn't require verification of income, assets or employment. (NINJA stood loosely for no income, no job, no assets. The lender assumed you had those, but didn't verify whether you, in fact, did.)

Nowadays, almost any loan is going to require verification of income and assets. And the lender definitely wants you to have a job.

Is a down payment necessary?
Q: With the mortgage crisis going on, does a new homebuyer need to have more money for a down payment?

Holden Lewis: Oh, definitely. Nowadays, a lot of borrowers want to see a down payment of at least 10 percent. A year ago, you might have been able to get a subprime, stated-income mortgage with a down payment of 5 percent. Since then, the subprime market has shriveled, stated-income loans are as rare as liberal Republicans and requests for low down payments are regarded warily.

In short, lenders want you to have a job, they want you to be able to document your income, and they want you to have a down payment (for a purchase) or some equity (in a refinance).