80/20 Loan Advice

Posted on: 13th Oct, 2010 04:57 pm

we are desperately in need of some mortgage advice... we purchased our home with an 80/20 loan because we did not have the money to put down to cover pmi. luckily my husband and i both work and have managed to pay our payments on time each month. here's my question... our second mortgage is a balloon loan which is not due to expire for another 10 years. our first mortgage is an arm (currently at 6.25%) and our 2nd mortgage is at a fixed rate of 9.1%. we purchased our home for $275,000 and it is only valued at about $220,000 now, so we don't have the equity to refinance. we would like to use our tax returns for the next few years to apply towards our mortgage. should we apply our payments to our 1st mortgage or concentrate on paying down the 2nd mortgage?

Total Reply : 4

Hi smokegirl,

You will have to make payments toward both the loans. You cannot stop paying one loan. If you do so, the lender who does not receive his payment can foreclose the property or charge off the account.

Thanks

jameshogg

Posted on: 13th Oct, 2010 09:04 pm

Thanks James,

I should have clairified that we still plan on paying both loans I was just wondering if we have extra money to put towards the mortgage, would it be better to try and pay down the first mortgage so we could eventually combine the two mortgages into one witha refi or is it better to try and pay off the balloon loan in 10 years when the full amount is due?

Anonymous

Posted on: 14th Oct, 2010 08:39 am

You might want to think about refinancing your first position and subordinating the second. Who currently holds your mortgages?