Home Loans and Support

Refinance Options for 1st and 2nd

Discussion in 'Refinance' started by Planner75, Jul 21, 2012.

  1. Planner75

    Planner75 LoanSafe Member

    1. I'd like to refinance my 1st again to take advantage of the significantly lower rates at the moment. Unfortunately, my home remains underwater and I'm told that I cannot refinance through the HARP program a second time. That said, is anyone aware of other refinance options for a 1st loan that was previously refinanced via HARP DU Refi Plus?

    2. I have a 2nd that is currently locked at a rate of 7.25% with a balloon payment due in March 2018. Ideally, I would have liked to have consolidated this loan when I refinanced my 1st loan, but no dice when the house is underwater. That said, is there any wisdom (or even the possibility) in looking to "refinance" the 2nd into a HELOC or similar variable rate loan without a balloon payment? I'm open to taking a risk on a variable rate in exchange for eliminating a balloon payment that would wipe almost all of my savings.

    Thanks, Steve
  2. readytoswim

    readytoswim LoanSafe Member

    What state are you in? Is your 2nd non recourse? Do you plan to stay in your house for awhile? How far underwater is your 1st?

    If I was in a state like CA, I was planning to stay in my house, didn't mind wrecking my credit for a few years and 1st was underwater I would just stop paying on the 2nd entirely and settle my 2nd for 10% which you could consider your own refinance plan ;). Search for the settle your 2nd thread for my details. Otherwise I don't think anyone will refinance you. You might also try calling your lender and see if they'll negotiate with you, I've heard some people have settled without missing a payment.
  3. Planner75

    Planner75 LoanSafe Member

    Hi ReadytoSwim,

    Thanks for taking the time to reply. I am located in CA. Both of my home loans are full recourse. I don't think any lender would be willing to negotiate the second should I stop paying. The 2nd note would most likely be sold off to a third party collection agency and I would get smacked with a bank levy in the full amount. I'd be satisfied if I could just remove the balloon payment component.

    Thanks, Steve
  4. readytoswim

    readytoswim LoanSafe Member

    Steve,

    My understanding in CA is that both the 1st and 2nd have 2 choices when it comes to home loans. Either foreclose non judicially or foreclose judicially. Banks choose not to foreclose judicially because of the cost involved and the year long right of redemption that follows. How much is your 1st for? How much is your 2nd for? How much is your house worth? If the first is underwater, then the 2nd typically will not start the foreclosure process because they would not get anything after the foreclosure. So with an underwater 1st and 2nd, basically the only thing the 2nd can do is charge off the account and send it to collections. At some point collections will try to neogitate which is where you can settle for pennies on the dollar. They might try to get a judgement through the courts, but it should be thrown out because by law they can only foreclosure and they don't want to because the 2nd gets nothing if the 1st is underwater. I really suggest you read the Settling your 2nd thread about what people have done. If your 1st and 2nd are not underwater then I don't know what your options are that make sense.

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