Refinance Second Mortgage


A few years ago you ran into some debt problems, your credit (FICO) score took a nosedive, and you had to take out a second mortgage to cover all the bills. Since that time, you've managed to recover financially, religiously paid all your bills on time and wonder if you might not be able to refinance that high-interest second mortgage.

Yes, you can. By now, you are probably beyond the prepayment penalty and ready for a little financial breather. It's time to refinance that second mortgage and this time you will probably be able to get more money at a lower interest rate. Your hard work has paid off.

At this point you have many options. You may want to roll what's left on your 2nd mortgage into one mortgage payment by completely refinancing your home. Now that your credit is back on track, this is a very viable option, especially with the current interest rates as low as they are.

Do you go for a fixed- or an adjustable rate-mortgage? Do you seek a 15-, 20- or 30-year mortgage? Good questions and they all depend on your future plans. Let's say your job situation has changed and there is a good chance you won't be living in the house more than another five years. In that case, it might be best to take a standard 30-year mortgage at an adjustable rate. In most cases, this will allow you to live in your home at a lower monthly payment, allow the home to appreciate in value and when it comes time to sell, you could walk away with enough money in your pocket to move into a bigger home. This is just one scenario; it all depends on your personal situation.

Mortgage lenders have become very creative over the last few years, and if your credit and professional situation indicate you are a good "risk" for refinancing, you will be amazed at the number of options you have.

Once again, when refinancing a second mortgage — or any mortgage refinance — care must be taken in selecting a lender. Make sure you get a copy of your current credit (FICO) score and proof of payment for all your bills. Now, it's time to go online. That's right, no driving from lending institution to lending institution filling out tons of forms along the way.

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