Q: I bought my first home in Woodstock, GA, back in June, 2002. My credit score was marginal (around 600), and I was an independent contractor taking every deduction under the sun, so my tax returns looked like I wasn’t making any money.

I was only able to qualify for a first mortgage of $121,800 at 7.25 percent, and a second mortgage of $29,901 at 12.55 percent. Both of these loans carry a 5 percent prepayment penalty for the first two years.

But things have changed. Although I’m still earning around $50,000, my credit is now in the mi-600s. My wife is from Brazil and we are trying to get her citizenship approved.

In order to get out from under these loans, we are thinking about either selling the home or refinancing. Shall we wait until June, 2004, when the prepayment penalties expire? Or, could we get such a good deal that it would be worth paying the penalty?

I don’t know what to do, but don’t want to miss the “lowest rates ever” Can you help?

A: Don’t worry low interest rates aren’t going anywhere, or at least, rates will still be a whole lot lower than what you’re paying next June.

But you should talk to a couple of reputable lenders about your situation and show them a copy of your improved credit history (you can purchase your credit history and credit score for $12.95 at myFICO.com.

This will allow the lenders to walk you through a variety of financing scenarios, and perhaps even advise you on how to raise your score further. (I’d like to see it above 680.) Sitting down with these lenders will help you determine whether you are better off staying the course until June (which isn’t that far away) or refinance now and take the hit.

As for your bride, under a new federal initiative, lenders will begin giving mortgages to people who do not have social security numbers. If she has a full-time job and earns income that could be counted toward paying the mortgage, so much the better.

Finally, your home may have appreciated in value and it may now be possible for you to use the equity to refinance out of both mortgages and have a regular 80 percent loan. So, it’s in your best interest to sit down with very reputable lender to see what can be done to alleviate your current situation.

Unless you feel like you’re going to get a whole lot of cash out of your home, I’d keep it, refinance and live cheap until you’ve got your financial life in order.

Sept. 12, 2004.