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Does a second mortgage affect my abilty to refinance?

I have bought a home at $415,000 and now the value of the home is $365,000. I owe $350,000 now and would like a lower rate. What are my options? My first loan is $300,000 and the second one is $50,000. by kjacx_686_248 from Springfield, Michigan. Aug 18th 2011 Reply


Deborah Garvin (loanmonarch)
#496 ranked lender in California - 53 contributions

Because of the reduced value of your home you do not have enough equity to refinance both loans. You could try to do a subordination of the second (leaving it in place) to a new loan. Check with a local lender...subordinations can be a little tricky (both lenders have to agree to the process). I think you may be successful because you do have sufficient equity to cover both loans (albiet, not enough to roll both loans into a single loan). Good luck!

Aug 18th 2011
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,908 contributions

Yes, second mortgages affect your ability to refinance. Lenders look at both loans for CLTV (combined loan-to-value). Without benefit of a full application, it would appear you should be able to refinance the first mortgage, and have the second mortgage subordinated - which is a process in which the current second mortgage holder reviews the new first mortgage transaction and agrees to leave their second mortgage in second place. Contact a local NMLS License Loan Officer to review your situation. In MN, or WI, visit www.MortgagesUnlimited.biz

Aug 19th 2011
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Bill Holmes (bill@a2mc.com)
#11 ranked lender in Michigan - 7 contributions

Greetings,I agree with LoanMonarch's answer below. I am a local lender in MI and have done some refinances where the 2nd mortgage has re-subordinated to the first mortgage. They were tricky and took some time; but in the end was worth it as the borrowers saved hundred's of $ monthly.If you would like to talk further about your specifics; email me directly @ Candace@A2MC.com.thanks.

Aug 19th 2011
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