Question by Roadfuzzz: Can a second mortgage be refinanced?
I have a mortgage and a second mortgage with the same lender. The two of them put together put me upside down on my home, so refinancing both wouldn’t happen.
The question is, to take advantage of today’s good rates, can I just refinance the second mortgage since it’s considerably less than the worth of my home? Are there any mortgage rules or anything else that would prevent me from doing so?
Best answer:
Answer by Glenn S
FHA, FreddieMac and FannieMae have special programs for refi’s for people in your situation. You can even be slightly upside down to be able to get these loans.
125% Refinance Home Loan Program (HARP Program)
In an effort to slow the trend of mortgage defaults and foreclosures, the federal government enacted the Home Affordable Refinance Act, which is designed to provide 125% home loans to borrowers refinancing with a home loan backed by Fannie Mae or Freddie Mac.
Refinancing under the 125% home loan program provides an opportunity for homeowners with negative equity to reduce their mortgage rate with a home loan up to 125% loan to value. The catch is that the 125% loan qualifying guidelines are strict and good credit is required.
I’d call your lender and see what they can do. Also call a few other lenders and see if they can help you.
What do you think? Answer below!
I seriously doubt it because your CLTV would be over 100% of the value of your home. However, if it is a local bank you are dealing with they may do something for you. It never hurts to ask.
Since you’re more than likely in a locked rate. In order to take advantage of the new rates you need to call your lender. If you have a fixed 5 year, and you’re 2 years in payback, then they will ding you the total interest they would have made for those 3 years and you would have to pay that in full if you want to lock in at the lower rate. If you have a variable, you may be able to lock into a lower fixed rate before the rates hike up again. Refinancing those mortgages may be difficult. Try speaking with another mortgage broker, they may be able to pull some strings with another lender. Otherwise, it may prove a difficult task. Good luck
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The bank will take the all your debt into consideration when evaluating a new loan. As such, they will see you have a 1st which, when combined with the 2nd you are trying to refinance, is greater than the value of the asset, the house, you are putting up as collateral. As a result you will not get approved.