Question by Mak: When to refinance and what to do with 2nd mortgage?
Bought home in October of 2006.Bought it with no money down. Did 80/20 Loan: 1st Loan 7.125% 2nd 10.5%. Interest only 5/ARM. Price was $ 584000 In the Los Angeles area.
Bought Home below market value, houses around my area are selling for $ 650K and up.How soon can I refinance to a fixed rate and what can I do about the 2nd mortgage in order to avoid getting a Jumbo Loan rate and having to pay PMI?
Answer by one_observation
not a lawyer or a mortgage broker, but believe that to get a new first, you will have to pay off (or refinance) both your existing first and second (so that the new first can be “first” and not behind the existing “second”)
not a problem, if there is enough appreciation to do 80% in the first based on current valuation … otherwise may be a problem juggling paying off and simultaneously refinancing both … unless you can get another hybrid pair.
also … with respect to timing … be sure you are aware of any prepayment penalties in your existing loans … and consider the impact of any points on either the old or the new loans … fees and points can eat up the economics pretty quickly
What do you think? Answer below!