Is now the best time to refinance your mortgage? Will a job layoff kill any hope of getting a new home loan? Can you challenge the results of a low appraisal?
Bankrate senior mortgage reporter Holden Lewis answered these questions and others during a recent online chat with Boston.com. Following are a few highlights from a transcript of that chat:
Should I refinance now or wait?
I have a jumbo mortgage with three years remaining on a rate that is fixed for 10 years, with another 20 years remaining on the loan after that. It is a relatively low rate for now. Is it better to ride it out for the next three years and then see what is available? Or, should I refinance now for 20-25 years?
-- dp1962
The answer depends upon where mortgage rates will be in three years. We have no idea what will happen.
It sounds like you plan to live in the house for a long time. Because you're asking this question, I'm guessing that this is a stressful situation for you. Maybe it's not keeping you up at night now, but maybe it will in a couple of years.
So think of refinancing now as a way to safeguard your peace of mind. Is the financial cost worth the psychic gain? That's not a rhetorical question. Remember that this isn't only a dollars-and-cents issue, it's also an issue of emotional maintenance. If refinancing now leads to less stress in the future, then maybe it's worth it.
I know Type A people who would ride that 10-year period to the end because they would get stressed out knowing that they had "wimped out" and sought the safety of a 20-year, fixed-rate refi at today's low rates. But I'm not a Type A and maybe you're not, either. For folks like me, peace of mind is worth money.
Will unemployment sink my mortgage hopes?
I would love to refi now but I am unemployed. Our loan-to-value ratio is small and I have cash reserves. Is my current mortgage company my best bet?
-- PeteInquire with the current lender. However, the lender probably is going to tell you that it can't underwrite a new loan until you have sufficient income -- and unemployment insurance probably isn't sufficient to qualify for a mortgage.