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Hello,
This is my first time on the forum. My wife and I did a 80/15/5 on our new home last June/07. The 2nd mortgage is for $36,000. We have 7 years to pay it off at 7.25. After the 7 years it has a cap of 12%. We would like to pay it off in the next four years. Our payments are $243.54 per month(30 years!). What would it take to pay it off in four or less years? We don't have any other debt. We could pay about 300.00 - 500.00 more per month to pay it off.

Could someone tell me what would be the best way to do this? I would also like to put $3,000.00 down as a one time payment. I think it's better than sitting in a savings account? Also, is there a calculator on line to run these numbers? I'm not sure how the interest works. Now that's pretty sad! Should we put all extra cash on 2nd till paid off, then focus on first?

Thanks for any help.

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi tkrog,

Welcome to the forum.

You can make some extra payments to pay of your [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] early than the actual loan period. Talk to the lender and give him your details how much can you pay extra each moth, he may help you better.

You can use this calculator to determine your monthly payments to pay off the loan early http://www.mortgagefit.com/calculators/arm.html

Feel free to ask if you have any further questions.

Best of luck,
Larry

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:40 | Post subject:

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Tkrog,

I don't think it's a good idea. I mean if you pay off the second first and then focus on the first, won’t you be delinquent on the first?

It's good that you wish to get rid of one of the loan fast but this may not be the appropriate way to do so. I suggest that you keep paying for the first and the second with some extra payment towards the second so that you can repay it fast. And, in this way, if it isn't possible to pay down the loan in 7 years up to which you're on a fixed rate on the second, you can then get a refinance loan combining the first and second at a fixed rate of interest. So, then you'll have only a single loan to pay for.

Alternatively, you can do a cash-out [url=http://www.mortgagefit.com/refinance.html]refinance[/url] on the first loan and using the extra funds pay off the second. But off-course you need to find out if you'll get the second loan balance as the extra cash and even if it's little less you can compensate with a part of your savings. This looks to be a better idea than the first, at least to me.

I suggest you keep at least some cash amount into your savings and not deplete it entirely. This is because you don't know if you'll need it or may be you may think of some financial planning wherein you'd like to invest this cash. So, think twice before taking out the entire savings.

Hope this helps...

God bless you.

Samantha

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:40 | Post subject:

evolovik26's picture
evolovik26 | Joined: August 15, 2007 11:43 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If i read your question correctly you have extra funds to start paying off your second sooner to get rid of the higher interest loan. Its a good idea and will save you lots of interest in the long run. In order to payoff a 36,000 loan at 7.25% in 4 yrs you will need to make payments of around $850-875/mon. Simplest way to do this is to send the check with a note that the extra payment is to go towards principle. You may also contact your lender to find out how they want your extra principle payments to be made. If you want to make one large $3000 principle payment first you can do the same thing send the check and ask them to apply it towards principle. It will be a good idea to follo this up with a phone call to your lender to make sure they apply the money to your principle instead of holding the money in escrow account for future payments. If you do make the $3000 payment first then you will only need to make $795 payments for the next 4 years to pay off this loan as well.
Good luck.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:40 | Post subject:

tkrog's picture
tkrog | Joined: April 8, 2008 09:42 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thank you all for your help and advice. I do plan on keeping up with my payments on my first loan. I was just saying we wanted to focus on the 2nd mortgage with extra payments to pay it off much faster.

So, I thank you all for running the numbers and your help.

Tim/tkrog

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:40 | Post subject:

michelle's picture
michelle | Joined: October 8, 2007 07:23 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Tim,

I have to agree with Eugene's advice. I do also however agree with Samantha that you should be sure to leave some money in savings for a rainy day. You just never know when something unexpected will arise and you may need access to some quick funds.

Best of luck to you - please let us know if you have any additional questions.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:40 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Should i refinance my home and combine my first and second mortgages to a fixed interest rate?

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi phil,

If you can get a low interest rate on the fixed mortgage and you do not want to leave the property in near future, I think you can go for the refinance. If you combine both the first and the second mortgages into a single mortgage, you will have to make a single payment each month. It can help you save money each month.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i want to refinance my firstand second together on a home that i owe $122,000 the second is $13,000 and the home is worth $165,000. How much will i need to put down for the refinance. I do not have alot of extra cash lauing around.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi tyler!

Welcome to forums!

If you are going for a conventional mortgage, then you will be liable for paying a down payment of 20%.

Feel free to ask if you've further queries.

Sussane

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