Can I Refinance My Second Mortgage?

There are a lot of things to consider if you are thinking about if you can refinance a second mortgage.
You need to review and evaluate your entire financial information to determine why you are looking at refinance and whether or not your budget has the discretionary income available to make the different payment amount. What is your goal? Do you want to take advantage of the lower rates of interest that have been a result of the housing industry crisis? You will need to find a lender that is willing to help you with your needs. You will need to negotiate with the lender for the most advantageous plan for your budget. You will need to get a low interest rate and the length of the term for repayment.

Before the lender says that you can refinance your second mortgage he will want verifiable proof that you can make the payments that you indicated that you wanted. You need to be employed where you can show pay check stubs as proof that you have stable income and that you plan to continue at that job to make the repayment of the loan. If you are unemployed and you have proof that it is seasonal unemployment you may still qualify. You will have to have a high enough income or enough in your savings account to show that you will not miss payments during the times of unemployment. An example of this type career would be a worker in the construction industry. Their work is cyclical, but the pay is high enough that there should be sufficient income to continue payments during the down time.

The lender will look at your debt-to-income ratio before he says you can refinance your second mortgage. The lender will require that you supply documented proof of your monthly income and your monthly debt payments. He will divide the total debt figure by the total income figure to get the ratio of your debt to income. He will expect that the percentage is 40% or less before he will want to discuss lending you any money. The equity in your home will also be looked at. You will be allowed to borrow a total of 95% of the value of your home.

If you have a government backed note with Fannie Mae or Freddie Mac you can get a note for up to 105% of the current market value of your home. You will need to give the lender permission to pull your credit reports and obtain the credit score associated with those reports. You can have late payments or delinquencies as part of the report, but the lender will decrease the amount that he is willing to lend against the fair market value of your home to 80%. You may not get a favorable interest rate if you have made payments more than 30 days late in the past 12 months. If your credit score is low because of negative financial information reports you may be disqualified. The answer to the question, ‘Can I refinance my second mortgage?’ is yes, but you must meet the qualification to do so.

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