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agy · Joined: 02 May 2009 Posts: 1 1.54 Dollars($)

Single family home in California, current value about $950K. My first mortgage is a 30 year 6.5% fixed rate, original loan amount was $585K in May 04, current balance at $404K. The second is a HELOC with the same lender, original loan amount is $250K in May 06, rate is prime +0.5% (so now is 3.75%), term is 10 years interest only then level interest and principal payments for 15 years. Existing lender offers as a refinance, a 30 year 5% fixed but the conforming amount of $417K. But I cannot get this from the lender, because even though, the 1st and 2nd are held by the same lender, the lender will not subordinate its 2nd to any new 1st. So my option seems to be to find another lender which uses a higher conforming loan amount and get a new 1st at $654K (existing 1st of 404K + heloc of 250K). Looked around and found an APR of about 5.2% fixed for 30 years at 1 point. Does this make sense given that I currently have the 1st at $404K at 6.5% and the 2nd heloc at $250K at 3.75%?

Niicss · Posted: Mon May 04, 2009 1:24 am Post subject:

Hi agy

You can combine both the first and second mortgage into one mortgage by refinancing it. As you are refinancing both the mortgages, the question of the 2nd loan being subordinate to new loan won't come into question. However, if you do not want to refinance the loan with your current lender, then you can speak to other lenders and check out the terms and conditions they are offering you. This will help you know about the current mortgage rates.

You can even speak to the lenders of this community and seek a no obligation free mortgage quote. This will also help you know the type of rates you can get when you apply for a loan.

Thanks.

JKennedySLG · Posted: Mon May 04, 2009 9:47 pm Post subject:

You will stay within "Super Conforming" guidelines with your loan amount being under $729k and rates are very competitive. I would recommend you look at the figures and review how long it will take you to re-coup the closing costs and also what your monthly savings will be. This will help you to make an educated decision.

Please come back and post with details. I hope this helps...

Guest

Thank you for your replies. The super conforming loan amount will enable a refinance of my 1st and 2nd as a new 1st. I had a further question as to whether that makes sense because the new first will be 5.2% APR 30 year fixed which is lower than the 6.5% fixed for the 1st, but higher than the 3.75% adjustable for the 2nd. I was thinking that the interest spread looks to be about break even, so that a refinance might not make sense, but cannot find a calculator to prove it to me, since the 1st is a 30 year principal and interest that originated in 5/04, and the 2nd is a 10 year interest only that originated in 5/06. Does the community have any ideas as to whether my situation warrants a refinance or should I keep my existing 1st and 2nd? Thank you.

sara · Posted: Wed May 06, 2009 2:59 am Post subject:

Hi skfdsdfj,

Rates are quite low these days and so I think refinancing both the loans in one will be a good option. You should note that though your second mortgage has a rate of 3.75%, it is adjustable. With time your interest may become higher. Thus, it would be a better option to refinance it at a fixed rate of 5.2%. You can use this refinance calculator in order to know how much interest you can save through refinancing.

Take care.

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Combine current 1st mtg and 2nd heloc and get a new 1st mtg?