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I am told that some lenders still offer interest-only loans at some pretty decent rates — Bank of America was mentioned by one reader — but your house must be worth more than you want to borrow or you are out of luck unless you have enough money to make up the difference. Equity consists of three parts - the cash you originally invested as a down payment, the money you paid the lender each month to reduce the loan’s outstanding principal, and the increase in the property’s value since you acquired it. The more equity you have, the more cash you have to retire the balance on the original loan when you refinance to get out from under an adjustable loan that is about to reset to a higher rate. If you don’t refinance, your new adjusted rate is likely to be greater than that on a new fixed rate mortgage because the adjusted rate is based on the fully indexed rate plus the margin, which is an amount added by the lender to cover his overhead and profit. Homeowner wants to refinance, but bank suggests a short sale - MarketWatch Intraday data provided by Interactive Data Real Time Services , a division of Interactive Data Corp. Find Out More

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