Refinance vs. 2nd mortgage?
I presently have a mortgage of $150,000 at 5.5%. I want another $50,000. Should I refinance at %6.5 or get a 2nd mortgage at %7.5?
- Anonymous1 decade agoBest Answer
Alot of it depends on how long you will be in the home with your current loan your current principal and interest payment is $851. I do not know if you are currently paying mortgage insurance or what the value of your nome is, that can make a larger difference in what can be done and whether it makes sense to do so. I am assuming you are under 80% LTV with taking out the 50k, which means you would have 20% equity after you refinanced the first mortgage your princpial and interest payment would be $1135 at a loan of 6.5% at $200k. Therefore your payment would go up $284 a month plus you would probably have around $5k in closing costs to refinance. About half of that woud be the escrow account cost to set it back up it could be more it depends on where you live, every state is different. If you take the 7.5% loan then your payment would be $349 mo for 30 years. So your total monthly payment would be $1200 a month, the closing costs on this loan would be minimal.
So $1200 - $1135 = $65/mo difference by taking the tigher second mortgage rate.
Then you will have to look at the potential closing costs associated with the first option and find yoru break even point. $5000/$65 = 76 months to break even because of the closing costs.
I think the second mortgage option is better, plus you can pay it off in the future and still have teh low first mortgage.
There are many variables to this scenario.Source(s): I am a licensed lender in OH,FL, SC, and IN.
- schoenfeldLv 43 years ago
even in the journey that your place is properly worth 650k, you nevertheless won't have the potential to get rid of the 2nd own loan without PMI because of the fact your individual loan-to-fee continues to be sitting at ninety%. for sure you could refinance your first own loan, to get a fixed fee. yet how long are you making plans to stay in the homestead? you have purely offered the homestead 2 months in the past. in case you're uncertain, i does not refinance yet. you will in basic terms finally end up paying brokers fee two times. and regardless of if its a "0 element, 0 fee" own loan, that fee continues to be gettiing rolled into the back and it will fee your cash. Your own loan is a fixed fee for 5 years, i could advise attempt to attend till (a) you pays off a number of that 2d own loan and/or (b) your private homestead fee strengthen, earlier you refinance.
- Anonymous1 decade ago