Q: We refinanced our house 2 years ago when rates were low and we took out one of those adjustable rate mortgage (ARM) you read about.

Our monthly payment has gone from $1,500 per month to $2,600 per month!

Unfortunately, we are in the process of getting a divorce and want to sell the house. But it could be another year or two until our divorce is finalized and we are thinking about refinancing now so that we can lower our payments.

Would it be really unwise to refinance our loan to a lower rate? We are having a difficult time paying our other bills and would greatly appreciate a reprieve of any type.

This may seem like a no-brainer, but we haven’t always made the right choices when coming to our finances. Any advice would be greatly appreciated. Thanks.

A: I’m sorry that your marriage is falling apart just as the interest rate on your ARM is going through the roof. Money problems are one of the primary causes of marital tension and it sounds as though things are tense enough without adding an extra $900 per month in mortgage payments.

Here’s the truth about refinancing: if your property is on the market, you’ll have a tough time refinancing your loan. Lenders will generally not refinance a homeowner when they are planning to sell the home.

If your property is listed currently, you’ll need to pull the home off the market to refinance your mortgage. You may wish to get a new interest-only loan. The term of the loan could be a 3, 5 or even a 10-year ARM. Some longer-term interest loan products may have a lower rate than shorter term loans. So you’ll need to shop around for the loan with the lowest rate and the lowest costs. If you end up having to pay some costs to refinance the loan, make sure you can make up those costs with lower payments in about 3 to 6 months, otherwise it may not pay to refinance.

That should bring your monthly payments down considerably, which will give you the reprieve you’re looking for.

Hopefully your credit is still good and you can find a reputable lender who will refinance you with no cash out of pocket. With any luck, your payments will drop back to the $1,500 per month level or below and give you both some breathing room.

Good luck and I hope you both have a peaceful divorce.

Dec. 25, 2006.