New Year's Resolutions for Those Braving the Market's Cold Waters

If you decide to participate in the foreclosure proceedings, you might want to hire an attorney to work with you through the process.

I have a $77,000 mortgage at 6.125 percent. I originally had a 30-year fixed-rate mortgage and am now considering refinancing at 5 percent for 20 years. I have 10 years to go until retirement and will probably consider selling and moving at that time. Would refinancing be a smart move. or should I just ride out this loan for 10 more years?

One key element that's missing is how long you have had your current loan. If you have had the loan for a while and have paid down a sizable chunk of the original balance, you may find that refinancing now even at 5 percent for 20 years will mean a lower monthly payment.

You'll save about $1,000 per year on the difference between your current interest rate and the new interest rate on a loan balance of $77,000. That would mean a savings of about $10,000 over the next 10 years. If you can minimize your upfront costs, refinancing would seem to make a lot of sense.

While your monthly payment on either loan may be about the same, you'll pay down the loan balance on the new 20-year loan much faster than your old 30-year loan. If you're working with a mortgage lender or broker, have him or her walk you through the numbers. Compare the principal and interest on your current loan with the new loan.

If you get an amortization schedule, see where you will be on either loan in 10 years' time. At that point, you'll be able to tell whether you'll be better off with your new loan and how much you'll save.

My wife and I jointly bought a home at the end of 2007 and are now in divorce proceedings.

We have tentatively agreed that she can live in the house for about two years, until I can refinance the mortgage and buy out her part of the equity. At that point, I'd want to move back into the home.

Now she says I have to sign a quitclaim deed (according to her attorney) and that she will sign it back in two years. Can the courts force me to sign or revoke my security of the deed just because we are divorcing?

The trouble with getting information from her attorney without the benefit of using your own is that you might get wrong information. You do not have to quitclaim the house to her while you are still on the mortgage.

If in the divorce agreement she agrees to refinance the property on her own, then you can and should issue a quitclaim deed to her, preferably at the refinancing closing table.

But by giving her all the rights to the property while still being legally liable for the mortgage, you forgo any leverage you have in the situation.

You need to discuss this issue with your divorce or real estate attorney.

Real estate agents work for the seller, not the buyer. Home inspectors work for the real estate agent and themselves. Neither usually has a background in home maintenance.

My advice: Don't trust either the home inspector or real estate agent and get a second or third opinion before buying a home.

That's a pretty cynical view of the real estate industry, and I'm not sure I agree with it.

First, real estate agents know that if they don't provide value and help someone make a good purchase, that buyer won't come back when it comes time to sell the property and won't be a good source of referrals, which is key to the success of any real estate agent.

Professional home inspectors worth their salt will be honest about the physical condition of the property because they don't want the home buyer coming after them with a lawsuit if they glossed over something serious to get the deal closed. Also, home inspectors, like real estate agents, depend on referrals to plump up their business.

While there are real estate agents who make referrals to only inspectors who won't kill a deal, many others want what is best for their clients and will try to get them a good inspector at a reasonable price.

And many home inspectors would rather make sure the home buyer knows what he is buying and understands the problems than keep the real estate agent happy.

The best agents will hand a home buyer a list of top inspectors, lenders and attorneys to chose from.

But you're right about one thing: It is always a good idea to think through a home purchase carefully before you sign the paperwork.

Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is "100 Questions Every First-Time Home Buyer Should Ask." Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites, http://www.thinkglink.com and http://www.expertrealestatetips.net.

© 2009 Ilyce R. Glink and Samuel J. Tamkin

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