Question re. a second mortgage?
My husband and I bought our first home in May of 2006. We have been trying to refinance but are having problems because 1) we have not paid enough of the balance down yet and 2) it is a manufactured home. Recently we ran into some personal problems which require some extra cash that we do not have. I called our credit union where we already have a personal loan out and have not been late at all. They told me our best bet would be a second mortgage and we could roll our personal loan into this. My husband thinks this is a terrible idea. I am not the best with finance matters of this sort. My main question is: will having a second mortgage make it harder to refinance, because we really need to do that at some point, we have an ARM and need a fixed rate. Please, any advice appreciated!
Public Comments
- Having a second mortgage may not necessarily affect the refinancing of your first. If you have a second, they are listed as the second lien holder. When you refinance, the second lien holder will still be the second with the new mortgage company.
- It could make it harder to refinance if the combined loan to value (the total of both your loans compared to the value of the property) is too high. You might want to talk to someone at the bank that you plan to refinance with and find out what the combined loan to value limit is and what the other qualifications are so you can make a decision with the information. Also, try to work out a budget that includes some money set aside for emergencies so that you won't need to use credit in the future. Getting new credit accounts can sometimes lower your credit score (which can make it harder to qualify for a good interest rate) and also it is good not to be in debt.
- A second would be a band aid effect on your current financial situation and may even worsen it. It could make it harder because now your debt ratio is higher due to the personal loan and second mortgage. Why don't you talk with a several local lenders about FHA fixed. It sounds like the Fed's may lower interest rates here in the next few weeks, so it would be worth it to at least talk to a few. Maybe you can refinance and have enough equity to pay that debt and take care of the personal loan. Wishes for the Best!
