mortgage

FAQs on mortgage refinancing

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?

QuestionI 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

AnswerThe answer depends upon where mortgage rates will be in three years. We have no idea what will happen.

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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.

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Will unemployment sink my mortgage hopes?

QuestionI 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?
-- Pete

AnswerInquire 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.

 

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