Refinance 2nd mortgage-Good or Bad? [mortgageloan-processor.blogspot.com]
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The decision to look into refinancing a second mortgage may or may not be the best decision for you. According to Smart Home Equity, "converting a variable credit line into a fixed second mortgage is an opportunity to save money." If you are considering a second mortgage refinance, you must make sure it will be in your best interest financially to do so before you jump into it. It all depends on the amount you owe on your home, how much the home is worth, and how long you plan to remain in your current home. Also, your current loan terms, the cost of refinancing a second mortgage and the reasons behind why you want to refinance your home are all considerations you should make.
First thing to remember before talking with a loan officer is that second mortgage guidelines are different than first mortgage guidelines. When discussing second mortgage loans you will consider the Combine Loan to Value rather than the Loan to Value. The Combine Loan to Value or CLTV is the 1st and 2nd mortgage loans added together and then you divide the sum-total by the appraised value of the home.
The most prominent reasons to look into a refinance 2nd mortgage are to receive a better interest rate, decrease the monthly payments, and benefit from cash-out refinancing. A popular method for second mortgage refinance is to combine your 1st and 2nd mortgage together. This might be a practical and financially-beneficial decision for you. Remember that closing costs on a second mortgage could cost you a few thousand dollars, but getting the lowest rate possible and taking advantage of tax deductions can make it very beneficial in the long run. That is why you may want to look into the possibility to combine your 1st and 2nd mortgage together.
Another second mortgage refinance option is applicable if you have an adjustable home equity line of credit. You may want to refinance adjustable rate credit line into a fixed second mortgage because adjustable interest rates have been increasing steadily the past few years. Because of the current economic climate, many people prefer to obtain a fixed rate second mortgage at this time. Even without rising rates that encourage people to refinance adjustable rate credit line into a fixed 2nd mortgage, many people simply feel more comfortable with predictable monthly payments that a fixed rate second mortgage offers.
Whether you are simply shopping around for a second mortgage or looking for options regarding refinancing a second mortgage, you will likely find fixed rate second mortgage options to be more appealing, at least in these economic times. Before you decide to combine your 1st and 2nd mortgage together or refinance adjustable rate credit line into a fixed 2nd mortgage, you should speak with a knowledgeable representative to help you decide what is right for your situation. After all, refinancing a second mortgage is not beneficial in every situation, so do not get ahead of yourself before seeking professional advice.
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