Can we refinace our 1st Mortgage withouth refinancing the HELOC too? (second mortgage, credit) - City-Data Forum

picture121 · 09-21-2008, 06:52 AM

We would like to do a cash-out refinance on our investment property. However, in today's market, we are afraid the appraised value will not support the cash-out we need. The home has 2mtg's. First is a 5/1arm that matures in 2010 for approx $400k- so we have to do something about that soon. The second is a HELOC also adjustable for approx $90K. We need $40K cash-out to pay off debts. My question is: Can we just refinance the 1st MTG with cash - out and not the HELOC.? This way the Loan amount would only have to be about $440K and it would be ok if the appraisal came in a little lower? We think the value is between $650k and $675k.
Any advice is appreciated.

BobKovacs · 09-21-2008, 06:59 AM

So you want to have a total of around $530k in mortgages on a house that "might" appraise for $650-675k? That's 78-81% LTV, which may be pushing it in today's mortgage market unless you've got killer credit and low debt/income ratios. I'd think you'd have to do something with the HELOC as well, considering that they may not be happy with the revised LTV rates given the increased balance on the 1st mortgage.

Doorway · 09-21-2008, 07:33 AM

No, you can't do that. They are completely tied into each other. Your Heloc co. has a lein against your first Mtg. You may want to combine the whole thing into one mortgage at a low fixed rate and get your 40K. If you have excellent credit, this should not be a problem. It can't hurt to talk to a lender about it. Good Luck

tahiti · 09-22-2008, 07:19 AM

Quote:

Originally Posted by Doorway

No, you can't do that. They are completely tied into each other. Your Heloc co. has a lein against your first Mtg. You may want to combine the whole thing into one mortgage at a low fixed rate and get your 40K. If you have excellent credit, this should not be a problem. It can't hurt to talk to a lender about it. Good Luck

that's what i was going to say as well, when i get rate quotes the question is always asked "do you have a second mortgage/HELOC that would have to be paid off".

sooner84 · 01-15-2009, 11:39 AM

bad info...It all depends on who owns the second lien. If they are willing to take a subordinate position to the first lien holder you may be able to refinance just the mortgage. Simply ask the holder of your HELOC.

HalfFull · 01-15-2009, 12:16 PM

Quote:

Originally Posted by sooner84

bad info...It all depends on who owns the second lien. If they are willing to take a subordinate position to the first lien holder you may be able to refinance just the mortgage. Simply ask the holder of your HELOC.

Correct. HELOC lender would have to agree to the new 1st mortgage. But having the HELOC will make qualification for 1st mtg harder since they will probably assume that debt will be fully drawn when they look at your overall creditworthiness.

It's probably simpler to just do everything fresh.