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We purchased our north of Dallas area home in Dec 2006, took out a pool loan (with a different bank) in Sep 2007....between the two mortgages, the combined ltv at this point exceeds 80%. This first mortgage is @ 80% (prior to pool build) ltv. Would we need to pay off the 2nd mortgage in order to refinance the first? OR since we took out a 2nd mortgage, do we have to wait 12 months even though we pay it off now prior to applying for a refi? We are not looking for a cash out or HELOC....just lower interest rate on 1st mtg. Does anyone know the answer to this? I get mixed answers from various sources. Thank you!

sara · Posted: Sun Mar 23, 2008 9:21 pm Post subject: RE: refinance first mortgage

Hi keiki,

Welcome to the forums.

It is not necessay to pay off the second mortgage in order to refinance the first. But you need to sign on a subordination agreement stating that the second loan will be of secondary status compared to that of the new loan. Otherwise, the second would by dafult become the primary lien on your home.

How long is it since you have taken out the second loan? though I don't think it will matter since you are refinancing the first. What matters here is how long you've been paying the first. You need to be making payments for at least 12 months till you can refinance the first. I guess in your case this has already happened.

Take Care

chrisburns · Posted: Mon Mar 24, 2008 7:04 am Post subject:

If your looking to lower the rate on the first, the simplest thing to do would be a cash out refinance to get a new 30 year fixed rate and pay off your pool loan. Most likely the pool loan will be less monthly for you by rolling it into a new mortgage than it would be to pay it off as it is currently structured.

ckalvesmaki · Posted: Tue Mar 25, 2008 4:46 am Post subject:

We purchased our north of Dallas area home in Dec 2006, took out a pool loan (with a different bank) in Sep 2007....between the two mortgages, the combined ltv at this point exceeds 80%. This first mortgage is @ 80% (prior to pool build) ltv. Would we need to pay off the 2nd mortgage in order to refinance the first? OR since we took out a 2nd mortgage, do we have to wait 12 months even though we pay it off now prior to applying for a refi? We are not looking for a cash out or HELOC....just lower interest rate on 1st mtg. Does anyone know the answer to this? I get mixed answers from various sources. Thank you!

Texas is a little strange......Here is the reason why.....Your pool loan under the TX A6 laws is not considered a cash out transaction.......ASSUMING the check went directly to the pool contractor. However according to fannie mae guidelines you are doing a cash out refi......most.if not all lenders will view the transaction as a cash out refi because of the way fannie desigantes the loan.....a lot of lenders do not offer cash out refi's in TX.....So your best be would be to wait till you have 12 months seasoning or subordinate the second.

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