Tuesday, 3 April 2012


The question of refinancing a second mortgage might not have popped up a couple of decades ago. Nevertheless, the different economic situation that we currently face today exposes us to the reality and also the benefits of second mortgage refinancing. Let us first look at what the second mortgage is, and how one can successfully refinance it to their benefit.

The second mortgage was probably unheard of approximately three or four decades ago, but today’s financial maturity makes the second mortgage a highly powerful and useful financial tool for mortgage owners. Also known as the home equity loan, you could possibly use your second mortgage to fund home improvement projects and repairs, pay for your children’s college fees as well as several other purposes. It also effectively provides you with the opportunity to merge and consolidate other high-interest debt accounts under it so that you could improve your financial stability successfully. Your home equity loan also allows you the possibility to leverage your equity and take advantage of the value of your first mortgage by borrowing against it.

If you are interested in applying for a home equity loan, you should probably start with your current lender (of your first mortgage) whom you would be more comfortable with, and one that could probably offer you more attractive rates and terms. Alternatively, you could apply for this service from any other lender out there that might offer a better overall package in terms of a home equity loan. Nevertheless, ensure that you countercheck with the Better Business Bureau (BBB) on the legitimacy of the lender that you are planning to deal with. Keep in mind however that if you default on your home equity loan, your second lender could possibly take your home. If you fall prey to foreclosure complications and your home has to be sold to bail you out, your first lender would be settled initially, and if there is anything remaining from the sale of your home, the proceeds would be utilized to settle your second lender. Thus ensure that you tread carefully when you deal with second mortgages, and treat it just like how you would treat your primary mortgage.

Just like home foreclosure trouble, many of the nation’s population are facing complications with second mortgages as the lenders are tightening the leash and enforcing stricter regulations with regards to equity lines of credit. Many are seeking to refinance second mortgages today in order to be free from financial difficulties, and if you are one of them out there that seeks refinancing of your home equity loan, rest assured that there are plenty of options available for you to explore on this front. Even if your present lender does not want to agree to second mortgage refinancing, you could approach other lenders that would willingly take up the option of helping you refinance your second mortgage.

Second mortgage refinancing services are readily available out there for those who seek it, for instance lenders offer the home equity line of credit (HELOC) to help people pay off or refinance their second mortgages. When you utilize the HELOC plan, you could be offered considerably lower interest rates, which translates to lower monthly commitment amounts, and you would possibly be able to pay off your second mortgage in a faster and more effective way.

One interesting proposition that you could explore is the consolidation of your first and second mortgage into one single account. This would help you consolidate both debt accounts under one account, which means you would be able to manage it better. And if you manage to persuade your lender to lower the interest rate of this single account once you merge both your first and second mortgages you would be able to save on interest rates as well for the long term, and effectively lower your monthly payment amounts at the same time. You could talk to your current lender about this proposition, or seek a quote from other lenders if your current lender does not cooperate.

Foreclosure is not a favourable outcome; neither for you nor for your lender, thus both parties should be determined not to allow foreclosure proceedings take over mortgages. Thus if you are facing the potential reality of foreclosure trouble, you should quickly seek a meeting with your lenders, be honest about your financial difficulties, and if possible work out a solution with them. They would usually be helpful and agreeable, as they understand that they stand to lose more money if you file for foreclosure or worse still, bankruptcy. If you are struggling with monthly mortgage payments, you could make use of a hardship letter and seek an audience with your lenders immediately. With some luck, you could be able to straighten out a repayment plan and keep your home, all with some basic negotiation skills. The same could be said about second mortgages, ensure that you keep close ties with your lenders at all times, and negotiations would be a lot easier then. All the best!

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