Mortgage/2nd Mortgage questions


T

Tom Jubb

Just a general question here. I have 2 mortgages currently. Is it
possible to refinance or take out another home equity loan to pay off
existing mortages, credit card and use cash for a new car purchase as
ours recently died? And if so what are my options. I'm confused with
the options I have found (LTV, line of credit, etc.) My goal is to
lump everything into one mortgage payment. Is that possible?

Thanks,
Tom
 
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J

John A. Weeks III

Tom Jubb said:
Just a general question here. I have 2 mortgages currently. Is it
possible to refinance or take out another home equity loan to pay off
existing mortages, credit card and use cash for a new car purchase as
ours recently died? And if so what are my options. I'm confused with
the options I have found (LTV, line of credit, etc.) My goal is to
lump everything into one mortgage payment. Is that possible?
In the credit arena, just about anything is possible. The
big question is why you like to make payments so much. The
goal should be to get out of debt and avoid having payments,
not getting any more.

You can get a new 1st mortgage to replace your existing
1st and 2nd. All that would really do is combine two loans
into one, and you make one payment a month instead of two.
That might be convenient, but it will cost you several
thousand dollars in closing costs. That is probably not
a smart move.

You can also do this mortgage combination and pull extra
money out of your house. The first issue is that a cash-out
refi has closing costs, and you will end up with a higher
interest rate. The 2nd issue is that by putting credit cards
and cars into a house, you are putting up your house as
collateral for these consumer items. You are also streaching
out the payments for these toys over 30 years. None of that
is a good idea.

You can also do any combination...you can replace the 2nd
with a bigger 2nd, add a 3rd mortgage or home equity loan,
or get a home equity and replace both your 1st and 2nd.

The better advice is to buy a cheap car that you can pay
cash for. Something in the $3800 to $4200 range would do
just fine. Then work to pay off your consumer debt. After
that, save up for a better car. If you talk to people who
retire with large 401K's and IRA accounts, most of them will
agree that they turned the corner financially when they
got off the car payment merry-go-round. Payments will keep
you broke.

-john-
 
$

$cott

Although the other poster covers your options, he didn't cover the
consequences.

Getting a 3rd Mortgage: Yea, if you can find one and you like paying
double digit interest rates (the cost of risk associated with being the
in the third lien position)
Getting HELOC: If you like an index has been increased 14 months in a
row (PRIME).
Getting a New 1st and Rolling the Old 1st and 2nd: Make sense if the
blended rate of the two loans are as competitive as the original 1st.

You would need to do the math, but my vote would be to get a new second
(and roll in the old second and outstanding debt)

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com
 
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P

PRNole

Is it better or wiser to continue to make extra payments on a 2nd
mortgage until it's paid off or make minimum payments, try to pay it
off whenever the home is sold, and use the money used for the extra
payments for other things?

In my case, I'm 58 y/o, plan to work another 8 to 10 years, and
currently owe about 50% of the max available loan to pay off. I send
them $1,000 monthly instead of the min. $225 required in monthy
payments.

So, I can either continue to make the $1,000 monthly payments and pay
the loan off in 3 more years -- or -- I can send the $225 minimum
payment, keep the $775, and close out the loan balance whenever I sell
my home.

Which is wiser?
 

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