Is is possible to refinance only one of my two mortgages?
Bought a first home 2 years ago, just before the “crash” occurred, so obviously I am a bit upside down on my house. With the loss in equity, I reasonably expect that I will not be able to refinance the entire amount of the house. However, the house was purchased using two different lenders, each for a portion of the house. When I approach one of the lenders for a refinance, should I expect that I can refinance just their portion of the total, or will they expect me to refinance the entire amount just under them?
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Nope.
Here’s the thing. When there are multiple liens against a house, there is an order. You have a 1st and 2nd mortgage. If you sold the house short sale right now, the money would pay off the first mortgage then anything that was left would go toward the 2nd mortgage, since that lender is 2nd in line to be paid. That makes it more risky for a lender to give you a 2nd mortgage, which is why the 2nd mortgage typically has higher rates. (The lender offsets their risk with higher rates, giving them a better return).
Nobody is going to refinance your 2nd mortgage, because you don’t have enough equity to cover the first mortgage and the 2nd mortgage, so it would essentially be an unsecured loan.
Nobody will refinance the 1st mortgage unless you also pay off the 2nd mortgage. This is because if you pay off the 1st mortgage, the 2nd mortgage becomes the 1st lien (they become 1st in line to get paid), which means the new mortgage is 2nd in line. Again because you don’t have the equity to cover the full loan after the other mortgage gets their share, it becomes like an unsecured loan.
only if the second lets say will subordinate to a new first deed of trust. There in becomes the rub. They will know that you are over the equity in the home and will probably not grant the subordination at all since they are at a huge risk in this transaction
I strongly believe that the “crash” had a drastic effect on the lenders so as to the mortgage. The mortgage loan is a loan secured by real property through the use of a note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. Hence, the lenders will require you to refinance the entire
No I dont think that institution will allow you.. coz if one situation is true then will be applicable in both of the mortgage cases… isnt it?
Refinancing two mortgages into one may be a very successful option, under certain circumstances. Not always, though. Very often it won’t be possible to tell whether or not to refinance two mortgages into a single first mortgage loan, or refinance separately into two different mortgages without very thorough and precise calculation of many factors.
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