How can I decide weather it's better to refinance my 1 & 2 mortgages or sell my house? What's better financial

Our 1st mortgage Co. sold our 2nd mortgage to a third party who holds our lein & is threatening foreclosure.

We can refinance our 1st mortgage to include the 2nd.

After 10 years in our home, we'd start over with another 30 yr. mortgage and a monthly payment approx. $150-$200 more, but at a lower rate than we're paying now. We'd be rolling approx. $7,000 in costs into the new loan. New interest rate woud be 6.75, we're now paying 8.0%

OR we can sell our house to pay off both mortgages. We would walk away with approx. $7,000 after all of the costs.

What do you suggest? What sounds like a better idea financially?

Answers needed ASAP (of course!)


1. Selling our home to pay off the 1st & 2nd mortgages will cost us approx. $16,400 in total costs and we'll walk away with about $7,000.

2. Refinancing/combining the 1st & 2nd mortgages will roll approx. $7,000 back into the loan immediately.

Our credit score is Okay - in the upper 600's. We are not behind at all on the 1st mortgage and have not had a terrible time paying the current payment (but are about at the limit).

However, due to incorrect info. from Chase 4 yrs. ago- we have never paid on the 2nd mortgage & that is where the problem is.

Chase Home Finance is our 1st mort. company. They are also the ones who sold our 2nd mortgage (line of credit that was discharged in an '04 BK), to a 3rd party. It's the 3rd party (First Mortgage LLC) who holds a lien & is going to foreclose. That HAS NOT yet happened and does not show up on our credit report. Our 1st mort. shows as current.

I'm so confused. What makes more sense financially?

Thank you to everyone who answers.

13 Answers

  • 1 decade ago
    Favorite Answer

    Call your local bank...

  • Anonymous
    1 decade ago

    I guess I would ask you a couple more questions.

    1. Where are you planning to live after you sell your house?

    2. Are you going to buy a new house and what do you anticipate will your mortgage payment for the new house? Or are you planning renting - what will your rent payment be?

    If a new house or rental unit will be around the same cost as your current mortgage then you might as well stay, in my opinion. However, if you are finding it difficult to keep up with your current mortgage and you can lessen your financial burden by selling, leaving and renting then that would be a good choice.

    Why is your 2nd mortgage threatening foreclosure? Are you not paying that mortgage?

    I'm not sure why your new mortgage will be more, if you are getting a lower interest rate and you have approximately 10 years worth of equity.

    We provide free, no obligation refinance quotes, if you decide to consolidate your 1st & 2nd mortgages.

    Best of luck with everything!

  • 1 decade ago

    I don't see how it's possible that you drop 1.25% in rate, only add $7000 in costs, and have a payment that rises by $150-200, unless you're maybe in an interest-only loan now, but won't be after refinancing?

    Costs are high, rate is high, but I guess if your 2nd is threatening foreclosure, maybe your credit doesn't look so good. I'd definitely push to get the costs down.

    But in the end, it sounds like refinancing might just be the right solution for you. You should absolutely get at least 1-2 additional quotes from other lenders before proceeding though. You could find you're offered much lower rates and costs.

    Source(s): 10 years in mortgage banking
  • 4 years ago

    Assuming you have done 100% financing on this property it might be best for you to keep the current loans. Lenders will charge higher rates for 100% or (80/20) financing options. Also you would only be allowed to use the purchase price as the value so if you did 100% financing you would have to pay the closing costs out of pocket since you would not be able to realize any appreciation on the property. Which for the combined loan amounts you have could be a good deal of money. However it doesn't hurt to inquire about a refinance. Find out what the new rates and payments could be and compare them to your current situation. If you can recoup the out of pocket closing costs with the monthly savings within 2-3 years then it is worth it. Outside of that you need to ask yourself how long you will have either the house or the current loans because if you plan on selling of refinancing within the next 3-4 years then stay with the current situation you would be spending additional money that you wouldn't need to.

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  • M
    Lv 6
    1 decade ago

    You don't have Citimortgage holding your loan do you? They are the most crooked company I ever had the ill pleasure of dealing with. The month they bought our loan the threatened to foreclose. The got our homeowners dropped an put our payments into a holding account that we never authorized and that caused our payment to get three months behind. My advice SELL or get a lawyer. I wish we had. We tried to sell and got told by the mortgage company we were selling for too little but we were selling for the appraisal value of the house. The stupid mortgage company thought we were in a different state. We tried to sell the house three times and they put a stop to it. We eventually just had to sign it back to them because we could not sell it. My advice to anyone with that company SELL SELL SELL!! They are crooks. They jack your payment up on a fixed rate and claim it is taxes and cause escrow shortages and the taxes hadn't changed then they say it was handling fees. The don't pay your insurance on time and get your policy dropped. Mine was dropped for two months before we found out. The reason: Non Payment. Our payment went up almost 500 dollars in two years and never could we get a straight answer as to why.

  • 1 decade ago

    Where would you live if you sold your home? Buy another one or rent? If you don't want to rent, you might as well keep your current home IF you can afford the new payment.

    If you decide to refinance, you need to contact the 2nd lien holder immediately and make sure you have enough time. Stress to the first lien holder or whoever you refinance with that time is of the essence because of the threat of foreclosure.

    If you can't afford the new payment, sell now. You can ask for a deed in lieu of foreclosure to allow you time to sell the house yourself. The you can decide to rent or buy a house that will cost you less.

  • 1 decade ago

    Well if it doesn't bother you to rent again, after owning your own home, go for it. We are paying a really high rate, and it stinks! I know how you feel. We had a lot of medical bills, as I had cancer and we got behind. We are trying to refinance our home at a lower rate as well. Maybe you could consult a lawyer and get some professional advice too, just to be on the sure side. Plus for closure is at an all time high with these rates, so now that I think of it, I would definitely call an attorney as soon as you can. Good luck, say a prayer too it helps:)

  • Anonymous
    1 decade ago

    Good question, being a loan officer myself I run into people almost everyday facing the same concerns. I think I can help you come to a conclusion on the best road to take to solve this problem with your home.

    I'm guessing you are somewhat behind on your monthly payments for your home so the investor who holds your loan is threatening foreclosure if you don't meet your monthly obligation.

    This is a very scary time for that to happen to you because banks and mortgage brokers are going bankrupt left and right these days because of a tremendous amount of foreclosures.

    One the other side of the coin, that could deeply affect you is the banks, mortgage offices and investors that are keeping their doors open for business are hoping for a turn around before they find themselves in deep water and are changing their qualification guidelines just about as fast as they can write them down...They are only willing to loan out money to strong borrowers with very good credit and debt to income ratio. (not saying you don’t) Just making sure you know this just in case the lender you are working with isn’t on top of the game.

    Do you know what your credit score is?

    Do you know what’s listed on your credit report, I’m hoping that the credit report agency has not caught up to your threat to foreclose and is not showing any 30 day lates on your mortgage.

    If any of these credit issues are showing up on your credit report I find it VERY hard to believe that whoever is feeding you a 6.75% rate isn’t telling you the truth.

    Now as for you trying to sell your home before the bank forecloses on you based on what you stated above id say is very risky because depending on where you live, and in most states homes are taking on average 30 to 90 days to sale if they are lucky!

    I am very experienced and I love my job with a passion. The company I work for is broker approved with all the big time banks and inverters and top quality hard money lenders.

    I'd happy to sit down and really fine tune all your options with you. Here is my e-mail address

  • Anonymous
    1 decade ago

    if you are having trouble paying now, increasing your payments would not work. because you are already in foreclosure, your credit has taken a hit. It may be best to sell as fast as possible and start over new when your credit is better.

  • 1 decade ago

    Why don't you consult this issue with professionals directly? As I heard these days foreclosre service company help you out with mortgage, foreclosure, insurance and investor solution with huge expert network.

  • Anonymous
    1 decade ago

    We just went through something similar to that and decided to sell! Selling worked out better for us.

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