Whats the best and quikest way to pay off high rate second loan on first home purchase?

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I just purchased purchased my first home for $ 181,900. I put 10% as a down payment$ 18,400 plus $ 500 ernest money. I had only 10K on hand a had to borrow the other 8K from another lender. My question with the 10% down payment does that give me some kind of equity if so when can I refi to get some cash to pay off the high interest 8K loan. Or could I get another loan at a lower rate and pay off the higher rate loan. I need some advice on the best way to go about this. Because we can handle the mortgage and the loan but want to get out of it as soon as possible. All serious suggestions are appreciated

  1. Reply
    January 26, 2011 at 8:38 am

    You can refinance your mortgage any time that you would like in order to get rid of that high rate 2nd mortgage. You can either try to refinance both mortgages together into one or you can simply refinance the 2nd mortgage only. However, what you want to look out for is:
    1. make sure you do not have a pre-payment penalty on your current loan that you are refinancing.
    2. make sure the deal will actually save you money and is in your best interest
    3. make sure you refinance to a fixed rate with the uncertainty of interest rates right now and for the next few years.

  2. Reply
    Jason F
    January 26, 2011 at 9:20 am

    what is your house worth now? refi might not help you if you are just scooping both loans into one. just wait a little while. pay down the loan and then refi when your property has appreciated.

    you might make it actually cost more money with closing costs on your new loan.

  3. Reply
    January 26, 2011 at 10:06 am

    How high is your interest rate on $ 8000.00?
    And on a first mortgage, your interest is high too, because you put around 5% down. Look like you have FHA loan with PMI (mortgage insurance) and FHA have prepayment penalty.
    So, you defiantly can’t refinance after few month, because it’s too costly for you and your house didn’t grow in value yet, will take at least one year. But in a mean time you can go to local bank and ask them maybe they willing to get you a better interest on our second mortgage. So, congratulation on your new house and Good Luck!

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