Refinance Second Mortgage

Refinance Second Mortgage - Don't Count On It

What is a refinance second mortgage?

We'll begin by telling you exactly what it means to apply for a refinance second mortgage:

• You are unsatisfied with your current mortgage - high monthly fees or rates or too slow of equity build-up, it doesn't matter. There is something wrong, you should have a better deal, and the only way to get it is through a refinance.
• There are two ways to make that refinance happen however - by applying for a refinance mortgage straight up, or using your available equity, taking out a second mortgage to buy off the first.
• To succeed with a refinance second mortgage you need a lot of equity, equity growth, and only a minimal balance remaining on your first mortgage in relation to your available equity.

Sorry Texas, but you just don't have the equity growth to make a refinance second mortgage worth your while. Refinance yes, but not with a home equity loan.

Don't get trapped

With the average home increasing in value by about 5% in 2005, there just isn't enough equity in the average home to cover the expenses of a refinance through second mortgages. Or maybe there is, but the slow growth of home values makes home equity loans a bit more stringent. Lenders will be less willing to provide second mortgages outright so your rates will probably be higher than what you are currently paying for your first mortgage. And the only way to have enough equity to actually apply for a refinance second mortgage is to have owned your home for several years - you're almost done with your mortgage! Why take a risk through an extension?

Lenders will offer you a refinance second mortgage because they can charge more for second mortgages than they can for a straight-up refinance, and unless you have the equity growth to make it make sense - which you don't - then you'd be better off keeping your current loan than risking your equity on a refinance.

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