One of my mortgage loans is 20k at a rate of 9%. What steps do I take to best refinance the smaller loan?

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5 Comments
  1. Reply
    linkus86
    February 10, 2011 at 1:45 pm

    Your first call should be to your mortgage broker and see if you might be able to consolidate your first and second mortgage into a larger primary mortgage (first mortgages always have a better rate), but be careful of prepayment penalties on either loan. Likely your mortgage broker will help you determine whether refinancing any or both loans is in your best interest and how to go about it. Once you get this information shop the deal with a different mortgage broker!

  2. Reply
    axaroth
    February 10, 2011 at 2:02 pm

    Don’t contact any internet scammers!

    Talk to your mortgage broker.

    Unfortunately there may not be much you can do about the rate on your 2nd loan. I had one like that on my first place. The 2nd loan is much riskier because in a foreclosure situation the 2nd loan company will most likely lose all their money. They are in line behind the first bank.

    In my case I waited a few years until I could afford to refinance and make the 20% down. I had to pay prepayment penalties of almost $ 3,000, which sucked.

    There’s not much you can do about the situation when you’re young and don’t have cash. But be happy— you own a home! As long as you can afford the payments, you’re okay.

    Still, doesn’t hurt to check with your mortgage broker to see if he has any ideas.

  3. Reply
    Jennifer
    February 10, 2011 at 2:11 pm

    Hi,
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  4. Reply
    Dale H
    February 10, 2011 at 2:58 pm

    I would go along with the idea of combining the 1st and 2nd as long as their are no prepayment penalties, you could improve the rate on your 1st mortgage and you wouldn’t be adding PMI to the equation.

    Depending on the loan to value, you may not be able to find a fixed rate on a stand alone 2nd that is much better than what you have and you might just opt to make additional payments to principal to pay it off faster. Only do that if you don’t have any higher interest non-mortgage debt.

    No broker is going to be interested in refinancing your 2nd as they can’t make any money on a 20K loan, but your local bank might be eager for the business and prime is down so HELOCS are back in fashion.

    9% is not the end of the world on a 2nd mortgage especially if the combined loan to value is in excess of 90%. If it is on a currently on 30/15 balloon, paying and additional $ 40/month will pay it off in 15 years.

  5. Reply
    Caleb Q
    February 10, 2011 at 3:15 pm

    if you have two loans with one loan having a lower interest rate than the other, you can combine them and get a lower rate. you first have to talk to your lenders on how to go about this. there are also other ways to get the best out of a refinance. check here for more ideas: http://www.whataboutloans.com/mortgage/mortgage-refinance-loans.html

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