Chat Plus

Real estate editor Maryann Haggerty and columnist Elizabeth Razzi respond to a question adapted from a recent online chat.

Q: Gaithersburg: I'm a first-time homeowner, so I'm pretty inexperienced with mortgages. I have two on one house -- a standard 30-year and a 15-year with a balloon payment. Do you think it would be possible to refinance and roll both mortgages into one 30-year mortgage? The balloon payment isn't due for 11 years, but it would be nice to get rid of it.

A: Elizabeth Razzi: Refinancing is the ideal solution, but it's much tougher to pull off now than it was a few years ago. It's still possible if you have equity in the home, income that you can document and a good credit score. But if you used those two loans to buy the home with zero down at the peak of the market, you very likely don't have enough equity to get a lender to agree to refinance now because of falling home values.

Maryann Haggerty: A looming balloon payment can be scary, but remember that 11 years is a long time, so don't panic. You don't have to jump into the mortgage market when it is as shaky as it is now. You can be patient until you have sufficient equity and until the markets have stabilized.

However, if you think you have equity from some combination of your down payment and price appreciation over your four years of ownership, talk with some lenders. Current interest rates are attractive for people with good credit.

E.R.: If you don't have other debts that need to be dealt with first, such as high-interest credit card balances, you might consider aggressively prepaying that second mortgage. At a minimum, it will shrink that balloon payment.

The next Real Estate Live chat will be at 1 p.m. March 7.