Refinancing Only Your Second Mortgage

Question: I would like for you to advise whether I should refinance my entire loan to pay off my credit card debts of about $70K. Our credit scores are in their low 6’s and we have two mortgage lates within the past 24 months. What is my best option per your expertise on what we should do?Ken Go: After fully analyzing the client’s current loan situation. Their first mortgage rates are in the mid 5’s and it is a 5 year fixed rate mortgage that they have only been in for one year and a half. Their second mortgage rate is at 8.5%. Due to the mortgage lates their credit scores have gone down between 20-50 points between the three bureaus’. They needed to get rid of the credit card payments because the average interest rates on those cards are about 12.5%. I suggested for them to refinance just the second mortgage, the rates was higher than their initial rates by about 2% but they will have paid off all their credit card debts. They now can write off more interest deduction on their taxes, their payments were reduced by about $1500.00 due to us eliminating the credit debts. Now, they have more flexibility to concentrate on paying their mortgages on a timely manner.

Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing. Please call or write to kennethgo

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Second Mortgage over 10%, Can I Refinance It?

Question: About 10 months ago I purchased a property with no money down, my credit scores were in their high 500’s and our property value now has gone up by 20% since we purchased the property. I have a prepayment penalty on my loan and I would like my payments to be reduced. What should I do?Ken Go: This caller, I spoke with about 4-5 months ago, I reviewed their credit history and advise them a few things. I recommended for them to apply for two more credit cards because they have very few trade lines. I advised them to pay off the small credit cards, use only one major card and do not close any open accounts. With the payments of the mortgage being on time, two new credit accounts and two other open accounts with zero balances. The scores of this borrower increase to 660 in 5 months. I am not recommending for them to pay off the first mortgage due to a very high prepayment penalty. They also still want to enjoy the interest only payment on it. So, we refinance their second mortgage to a 7% fixed rate mortgage, which lowered their payments by $80.00 with some cash out to pay off minimal debts. This client knows they will refinance this loan again when they are ready for a fixed rate mortgage. That is why this loan they got is a “NO CLOSING COST” loan; nothing was also added towards the loan balance.

Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing. Please call or write to kennethgo

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