Question by mcoopd1: Is it possible for me to refinance my 2nd mortgage and leave my 1st alone?
I ask this because most lender said I have to refinance my 1st in order to pay off my 2nd, but if I do that because of my low credit score my interest will go way up and it will double what I am paying now. Is there a solution?
Answer by VaTreasures
Try going to a credit union. They usually have very competitive rates and usually give better service to small loans.
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Depending on how much equity you have in the home I would reccomend looking into an FHA home loan. You can use it to refinance your first and second, and because it’s a Federaly Funded loan it’s not credit score driven. You can’t have had any mortgage lates within the last 12 months, it will allow you to barrow up to 95 percent of the value of your property, and FHA home loans are a 6.5 percent fixed loan for 30 years with no prepayment penalty.
I refinanced my second mortgage and didn’t touch my first. So, it is possible. They did want me to refinance the whole thing but I said no as they couldn’t match the great rate I had on my first. So it is possible, but you have to be firm.
If your credit score is low, the reason you need to payoff your first is because you don’t qualify for a second. A 2nd mortgage is riskier for a lender than a first, since a 2nd mortgage is the second person to get paid in the event of forclosure. So, lenders require better credit for a 2nd mortgage.
Lender’s are telling you that you need to refinance both into one mortgage because you will not qualify for a second by itself. My advice is to look at what your goals are. Not what the loan is. Are you trying to save money? Are you trying to consolidate debt? Give those goals credence over interest rates. After all, how good is a low rate if you’re still coming up short every month in your overall budget? If you’re just trying to lower the amount of interest you need to pay back, then get a copy of your credit report and see what you can do to better your credit score.
Sure man …
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Depends. If the refi is a cash out then you have to refinance both 1st and 2nd….if the refi is a rate & term refi only then you can do the 2nd w/out doing the first. The reason the lender/broker will try and get you to do both is because they can charge more in fees……