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My wife and I purchased our first home (a townhome) 4-5 years ago at the housing peak. (lucky us). Since we were just out of college with limited cash on hand, we ended up with a primary 80% mortgage and secondary 20% mortgage.

Our current home value and mortgage owed are roughly equal at this time. Our primary mortgage is at 6.35% (209k) and secondary 7.25%(45k). We plan on living in this home for another 5-6 years.

We have the opportunity at to pay off the secondary mortgage in full and refinance our first loan. However, having been burned buying our 1st house and watching it drop in value are hesitant to sink more money into it.

Does it make sense to do this and continue to pay extra in the continuing years off our mortgage and when we sell our house to use the money from that for our 20%+ on our next home

Or.... just accumulate cash to use as a 20% downpayment on our next home, thinking that we may have negotiation room with home seller agent and loan company if sell our home for less than or around the actual cost of our current loan?

greg3 · Posted: Sat Jun 19, 2010 1:12 am Post subject:

To be honest, I would not pay off the second and would keep the cash. Markets are still declining and by paying the second, you turn what is now a paper loss into an actual loss. If in 6 months housing is down a few ticks more, you will have effectively wiped out the equity you just paid for and be light 45K in your wallet. What I would suggest is looking into a refinance of both mortgages into one. It may sound crazy, but with your high interest rates, you could probably refinance both your first and second into one loan, even with mortgage insurance and save money. There are options to 97.75% to consolidate your 1st and 2nd. The MI may be tax deductible if your income is not too high and will be offset because you can significantly drop your rate.

You are short term with a goal in mind, don't throw good money after bad. Consult a professional and look at refinance options that don't require you to throw away money.

alencooper · Joined: 30 Jun 2010 Posts: 5 2.15 Dollars($)

Refinancing your first mortgage into one loan is perfect if you both lends itself to a higher interest rate. For example, with at least one initial ideal home loan with a higher percentage householders can get credit. Moreover, they also have a high interest rate second mortgage can bring. You quickly find mortgage loaners and to ask for quotes and terms can go online. Look at various proposals, and the number of outside work. An online mortgage calculator monthly payments and interest costs you can help to extract. An easier way than cost, the first time add interest to your mortgage payments. And use the data to evaluate each potential mortgage payments with interest; also, you want to factor the cost of refinancing. Like with your original mortgage, you have to pay fees and points. You believe that your interest can make savings want to be with these expenses. To bring to the table to make sure all your financial numbers, whether you are a mortgage lender in the office or talking on the phone. Have financial records, base, tax records and statements on bank balance hand.Pay Federal Reserve Board to pay close attention in 2008 and 2009 when considering refinancing your home. Check regularly to find out when interest rates on the level of mortgage rates to reduce your monthly expenses and you need to save money have reached. Away with a 2nd mortgage and pay your bills every month to save hundreds of dollars. The value of your home mortgage interest for there to cut in May.

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