The Second Mortgage Mistake That Could Tank Your Refi

March 6, 2013
By Gina Pogol

Some mistakes, like super-gluing your fingers together, are obvious right away. Get yourself some solvent and you’re good to go. Other errors, however, don’t become apparent until they do damage — for example, when you emerge from the grocery store on a 100 degree summer day with 6 large bags of frozen food and discover that you’re locked out of your car. Taking a second mortgage with an uncooperative lender is that sort of mistake. I’ll explain.

Refinancing When You Have a Second Mortgage

If you have a first and second mortgage, it’s usually best to wrap them both into a new first mortgage when you refinance. However, there are times when that isn’t advisable or even possible. If the new refinance balance would exceed 80 percent of the home’s value, you’re probably better off just refinancing the first mortgage and not paying for mortgage insurance. If your credit is good enough …

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