Q: I’m trying to refinance my loan with one of the big box lenders. I have a 7/1 adjustable rate mortgage (ARM) that just adjusted to 3.12 percent, which I love. Unfortunately, I think I’ll only have this rate for one year.

My spouse has insisted that we refinance to a 20-year fixed-rate mortgage it is taking forever, but we’ve been approved with just her income (I’m not earning an income now that I’m going back to school to get my MBA).

The problem is that we started the process over three months ago and the interest rates are considerably lower than when we started.

Do we tell the lender to restart the process and lower our interest rate to the rates available today? Do we tell them to restart the process and lower our rate or simply say we don’t want the 5 percent loan they’re offering and start shopping around?


A:You certainly can start the conversation with your lender about the interest rate on your loan and see what options are available to you. If you signed a document that commits you to this loan or to pay a fee if you don’t close on the loan, you might have to stick with the loan you applied for.

However, if you aren’t legally committed to this lender and you don’t want to move forward with them, I’d start the process all over again and see if you can qualify on her income for a 15-year fixed-rate mortgage at about 4 percent (some lenders are quoting 15-year mortgages at 3.875 percent as we went to press, a record low).

Just remember, if you start over, you might have to wait the same amount of time provide them with the same or even more paperwork to get the loan done.

Call the lender and ask what it would take for you to start the ball rolling on a different loan product. Find out if they will charge you more in fees (if you have to do another appraisal on your property, for example, or pull additional credit reports and scores).

If they will charge you all over again, then you should take the opportunity to shop around with other lenders to make sure you’re getting the best deal possible. And if you are in doubt as to what your obligations are to your current lender, talk to a real estate attorney and have her review all of your loan application documents.

I really like the idea of a 4 percent 15-year loan for you, or something close to that. It will make a huge difference in the interest you save over the term of the loan since a 15-year loan is tied to the lower interest rate so you save more money while a 20-year loan is tied to the 30-year rate.

Go for it. As hard as it is to give up a 3 percent mortgage, that interest rate won’t be around for much longer. Depending on where interest rates are a year from now, it’s possible you could get another year with a low interest rate but it would seem that a couple of years down the line, the rate will increase. So unless you plan to sell and move in the next three years, I’d try to lock in at these once-in-a-century low rates!