Q. I am trying to borrow $50,000 on my home to pay the IRS. The balance on my townhouse is approximately $26,000 and the value is $100,000. I am self-employed and have $50,000 stated annual income. My credit score is 650 but I completed Chapter 13 bankruptcy in March 2005. A nationwide lender has offered to refinance my home at almost a 12% interest rate. Should I take that?

A. We cringed when we saw that 12% interest rate, but you’re got three big things working against you:

• You're less than two years out of bankruptcy.
• You're self-employed.
• You owe money to the United States government.
  

While we hope you sought competing offers from other lenders, we wouldn't be shocked if 12% from a subprime lender is the best you can get. Just try to make sure any loan you accept doesn't impose pre-payment penalties. As early as next summer, once the IRS is paid off and you've been out of bankruptcy more than two years, you could look into refinancing and probably qualify for a considerably lower rate.