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1st off you should not be asked to do anything- your broker or lender takles care of it all.
Yes, you do have to request the subordination as you said and it is to remain in 2nd lien position. It is not a fiasco or typical corporate BS.
The 2nd mortgage holder is basically reunderwriting you to re affirm that you have sufficient income, payment history, credit score and equity in the property as well as wanting to see the terms of your potential refinance to document that you are getting a better loan.
This takes approximately 1-2 weeks not 2-3 months(though some smaller banks were at the peak of refinancing last spring).
Most banks also charge an upfront fee to look at the request- typically anywhere from $125- $175 so be prepared to pay this as well.
The challenge and "scary" part about this is there are no guidelines to reference. It is done on a case by case basis so no one can tell you your preapproved.
End of story I refinanced and paid off the 1st , but for many people their LTV will exceed 80% when doing this.
On another note if you have good credit and solid employment a local bank that does not sell their mortgages can blow away all the other so called banks!
There are not many around but they are there.
Also if rates go down , with one of theses banks you can pay approx imately $1500 and they will modify the rate.
Also if you come into money and want to pay off part of your mortgage and have them recast it for a lower payment it is the same $1500.
That was a typo- sorry about that. The comment( its not as bad as you were told) was to let you know that don't not try if you think it is in your best interest to do it because of some 3rd hand story you heard.
Some bad experiences are out there but they are the exception and not the rule- also don't believe you are getting all the details when reading a 1 sided rant on the web. What I wrote about was the process and expectations for subordinations, including the fact that there are no guidelines hence no guarantees.
As far as the "advatntages" you like about a small bank- any lender can do those things- and with lower fees at some banks.
First mortgage we owe $230,000.00, it's a 5% 30-year fixed. With taxes and insurance, our first mortgage is $2,180.00 per month. Our second mortgage (which has been refi'd twice) is interest only (point under prime, interest only for 10 years and then amortize loan begins for additional 10 years) with a balance of $165,000.00. Our payment is a measly $290.00 a month right now, but afraid it's gonna sky rocket. Our house would probably appraise between $420,000.00 and $500,000.00.
Our biggest concern is the second mortgage. We don't qualify to refi just our second. Not sure if combining the two mortgages is a good idea. We had someone (broker) give us a refi FHA mortgage quote with a rate of 4.75% (combining both). Closing costs would be around $7,000.00. We plan on staying in the house for at least 15 more years. Our new payment (including taxes, homeowners insurance and FHA insurance) would be around $3,000.00.
We're looking for security. The second loan is sweet right now, but could turn into a nightmare. We're looking for some good advice...
Can't you fix the rate on the second loan by committing to start principal repayments now? Now would be a great time to do that, before interest rates go up. Your rate on your other mortgage is very good. I don't really see a need to refinance the whole thing. A mortgage broker will try to talk you into that because they get a commission, but I think you can just lock the rate on the second mortgage and move forward.
That was a typo- sorry about that. The comment( its not as bad as you were told) was to let you know that don't not try if you think it is in your best interest to do it because of some 3rd hand story you heard.
Some bad experiences are out there but they are the exception and not the rule- also don't believe you are getting all the details when reading a 1 sided rant on the web. What I wrote about was the process and expectations for subordinations, including the fact that there are no guidelines hence no guarantees.
As far as the "advatntages" you like about a small bank- any lender can do those things- and with lower fees at some banks.
Countrywide and later BOA would not modify my interest rate when the rates dropped , all they would do is say we will switch you to the department that does refinance.
Some small banks that keep the loans in their portfolio actually advertise that they will modify your loan for an x dollar fee.
Any large bank I have dealt with would reduce the term of the loan with a large prepayment but never recast the mortgage to lower the payment.
It is understandable because they have to get permission from the investor , who may or may not cooperate.
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