Which re-financing option is better – 95% financing with PMI or 1st and 2nd mortgage without PMI?
The house has a balance of $ 125K and is appraised at $ 155K. I’d like to payoff my credit card debt, which is approximately $ 14K. When I refinance, should I ask for a loan of $ 139K (125K+14K) and be required to pay PMI or should I ask for 2 loans? One of the loans will be 80% of the total and the other loan would be the remaining 20% of the total. By choosing this option, I understand that I won’t have to pay PMI. What’s the best way to do this? The only downsides I can see is that I would be making 2 payments instead of one and that the total of the 2 payments will be higher than the current mortgage payment. Are there any other negatives I should know about?
My credit score is 720. I’m not certain of the interest rates yet, but when we initially spoke the lender said they could get me a 6.75% rate.