1st/2nd mortgage loans; paying off just one?

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i wanted to pay off only the 2nd mort (home line of credit) and my friend told me that both loans gotta be paid at a same time or something gets violated etc. i don’t get it. i wanted to pay off 2nd loan and refinance with 1st (big) loan to match my current value 🙁
he said i should put down the money to refinance etc. i’m confused now. what’s the deal…

  1. Reply
    May 1, 2011 at 8:06 am

    The deal is that your friend is only partially right. You cannot pay off your first while you have a second. That would make your second, your first fith oblogations that they never comitted to. Such as whom is going to do the escowel for taxes and INS?

  2. Reply
    May 1, 2011 at 8:31 am

    You can pay off the second loan without creating any problems with the first mortgage.

    But if you refinance the first loan, that loan will be repaid with the money you borrow with the first loan. Put another way, if you are refinancing the first loan, both loans have to be repaid.

  3. Reply
    May 1, 2011 at 8:44 am

    If you are refinancing, why don’t you just refinance the entire debt and pay them both off in the refinance? Some equity lines or mortgages have prepayment penalties, maybe that is what your friend is referring to. A refinance would be considered a prepayment because essentially you are paying off that entire loan and getting a brand new loan.

  4. Reply
    May 1, 2011 at 9:30 am

    Your friend doesn’t know what he’s talking about. You can pay off the second anytime you want. I’ve never seen a second lien with a prepayment penalty–they’re illegal in most states. You don’t necessarily need to put money down to refinance, but there will be costs involved (closing costs). Those are usually rolled into the new loan. Usually the only out-of-pocket expense for you is the appraisal–about $ 325.


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