Refinancing Second Mortgage - part 2

by Lance Williams

Refinancing a second mortgage becomes less favorable, if there are prepayments fees attached to the first mortgage. If the borrower has to pay very huge costs at the time of refinancing, then also he/she can deviate from refinancing. The second mortgage lender must agree in writing to subordinate his claim to a new first mortgage.

The old rule of thumb was that you should refinance a second mortgage only if the rate is at least one percent lower than your current rate, but in these times of no- or low-cost refinance loans, you may decide that refinancing is in your best interest. If you are halfway through your mortgage term, it is probably not in your favor to refinance because you are now paying more in principle than interest.
In short refinancing a second mortgage is worthwhile if properly utilized.

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Copyright (c) Lance Williams

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