Many homeowners take cash out to pay off high-interest debt or make home improvements.Use our refinance calculator to see if you have enough equity to reach your financial goal.HARP is only for Fannie Mae- and Freddie Mac-guaranteed loans.The 2012 multi-billion-dollar settlement between the biggest banks and 49 state attorneys general (over robo-signing) to aid distressed borrowers included money to pay off second mortgages in some states.“It’s worth finding out if that’s the case in your state by checking the website for your state’s AG to see if your existing servicer is participating,” Garcia says. Search the AG’s website for “mortgage settlement” to find the information.There are many reasons why you should look into refinancing their second mortgage, including decreasing your monthly payments, lowering your interest rate and reducing or eliminating private mortgage insurance (PMI).It can also help you change the term of your loan if your financial situation has changed, as well as help you get cash back at closing.
You may be able to use this equity to refinance your current mortgage and receive cash at a low interest rate to pay off your credit card debt.
In some cases, refinancing can also allow you to consolidate your first and second mortgage into a single loan.
How to Refinance The first step in refinancing your second mortgage is to determine whether or not it will prove of financial benefit to you.
This is due to them thinking you have taken cash out if you have used it in the past 12 months.
So they will count that as a cash out transaction which limits the amount that can be borrowed due to risk factors versus one that has not been touched in the past 12 months, which would be considered a rate and term refinance which is much more favorable to the lender.