Q. My wife and I are 48. One of my financial goals is to own our house free and clear by the time we retire, in about 15 years. My wife's parents hold the mortgage on our house. They are in their late 70's. We have 20 years left on the mortgage, with a $160,000 balance at a 7 percent interest rate.

Under these circumstances, is it a good idea to pay down our mortgage, given that when my in-laws pass away, the note will become part of the estate and therefore would be forgiven as part of my wife's inheritance?

---MR, by e-mail from Austin, TX

  

A. The inheritance aspect confuses the issue. If they had not loaned you the money, your wife's parents would have other assets in their estate, not less assets. Some portion of those assets would be distributed to her as part of an inheritance. Having a mortgage from them only means that you are getting use of the money today. It doesn't mean more money.

What makes this complicated is that you are now, in effect, paying a premium for the use of that money. A 20-year mortgage for $160,000 at 7 percent would have a monthly payment of $1,240. According to www.bankrate.com, a consumer finance website, you can now get 15 year loans with no discount or origination points at rates as low as 4.75 percent in the Austin area.

This means you could replace the current mortgage with a 15-year mortgage that has a monthly payment of $1,244--- just $4 a month more--- and eliminate 5 years of mortgage payments. That's nearly $75,000 in payments you would not have to make.

What you do really depends on having a long and completely open conversation with your in-laws. I'm sure they like the 7 percent interest.   I'm also sure that they loaned it with the most helpful intentions. But the benefit of refinancing---for you--- is major. One suggestion: do the refinance with them. It will cost less and their monthly payment will be the same even if their interest income is lower.

  

Q. I work in education, make about $60,000 a year, and hate my job. I am 44. I have found several opportunities I would like to pursue, but all with substantial pay cuts. Also, I worry about losing my benefits. I have a child starting college and another in high school. I owe $115,000 on my mortgage with 15 years to go. I have no other debt. I have about $30,000 saved and another $35,000 in a district sponsored retirement fund. My home is worth about $180,000.

My goals are: 1) to change jobs ASAP; 2) to purchase a home in another state, near my family and where I would ultimately like to live in a house that cost about $175,000; and 3) build up my retirement.

I have worked hard to get out of debt and to keep my home. But I feel trapped by work that I dread every day, yet which pays me enough to keep my home and kids in good order. HELP! What's the next move?

---E.T., by e-mail

  

A. At the risk of sounding a little sappy---start by counting your blessings. I'm serious. If your note was on an internet conversation board it would only be posted for a few seconds before someone would say they are trapped in a job they hate that pays less, don't have a house, and haven't seen their kids in a long time.

And that would be before the real miseries of the human condition started to appear.

Your current state might even be a rite of passage to adulthood. I'd bet heavy money that most people have "been there, done that" by the time they are 50.

My practical suggestion: try unbuckling some of your constraints. Your kids, for instance, might not be as attached to your house as you are. If you can find a house for $120,000 you've got a shot at cutting your mortgage balance in half--- and cutting the payments by still more if your new rate is lower.

Start looking at your other expenses: if you really hate your job, you should be willing to give up some income in order to do work that gives you pride and pleasure. Kids will trade a lot of   "stuff" for a happy parent.