If your first mortgage has little or no equity, there's no way a bank will refinance into a note that has a greater value than the collateral (your house). You are wasting your time trying to do such a thing. That leaves you with the companies that handle high-risk loans. Even they have their limits. You need to look at how much of the payment load you can continue to handle and make a decision about which losses to cut. With little equity to work with you are not in a position to bargain.
Well, I was granted it before..I mean, I already have the loan..I just want to refinance both into one loan...maybe, as someone said, the bank that did this first one would do it for me.
The second mortgage is 30 years at 12.9%..you can see why I want to refinance.
Well, as I said in an earlier post, I was granted the loan..surely someone can help me.
improvements.
Yes.. Surely they can, but they probably arent going to.
Lets say your the one with 100k (i made that figure up) to lend. You can either lend it to Joe who wants to buy 130k house and pay 30k down or you can loan it to Brian who has a 70k house and wants to borrow
100k. Who would you loan it to? At what interest rate.If you choose Joe the most probable worst case scenario is Joe goes broke and you get a 130k house that you need to turn around and sell for 100k. Joe isn't as likely to let the house be foreclosed because he doesn't want to loose his 30k initial investment.
If you choose Brian probable worst case scenario is that Brian goes broke and you get a 70k house with 100k loan on the books. Your going to take a loss selling the place and Brian is more likely to let the house go because he has no option to sell it as it isn't worth near what he owes.
Most lending institutions don't keep the loans anymore. They set you up with a mortgage and sell them off to one of the big boys withing the first couple of months. The big boys don't want high risk loans and if you cook the books so they get stuck with the high risk loans they will quit buying your loans alltogether leaving you out of business. The ones that are willing to write these loans are able to do so because they charge higher interest rates to make up for the additional foreclosures and overall headaches these loans cause the company.
I realize you have good credit. Good credit is probably why they gave you the over value loan in the first place but even with good credit you can't borrow 40k to buy a 20k Toyota AND get the same interest rate as the guy who wants to borrow 15k to buy a 20k Toyota.
I wish you well in trying to get this issue resolved. Your best bet may be to start paying additional principal on the loan. Once you get down to a 90% debt to value you can get a standard mortgage with PMI and a decent interest rate.
Steve B.
Why would they want to replace a 12.9% mortgage with a market rate one?
>To get the best loan and rates, you must first prove you don't need them.
If you actually ARE capable of paying the thing off, and you can convince a relative or friend of that fact, then you ought to be able to get a private loan in the 6% or 7% range. Or you can find something else to use a collatoral, and take out a loan against that. Or you could let the lender(s) have the house and come out ahead.
It comes down to this. Are high risk lenders in today's environment making loans at substantially less than 12.9% to folks in similar situations? If the answer is yes, which I doubt, then maybe you can find someone to refinance it. I tend to doubt it because with no equity, your 2nd mortgage is very similar to an unsecured consumer loan. The only advantage the 2nd mortgage has for the holder is they can foreclose and force you out of your home, but it will only cost them legal fees to do that, with no return from the sale of the house.
They do it all the time. In recent years the banks have been working overtime on refinancings. They do it because if they don't, they fear you will go elsewhere.
This OP's problem is that he apparently took out a second loan and now has a combined indebtedness in excess of his collateral. I've always been leery of those "lenders" that will lend more than the value of the collateral; I doubt you will find a legitimate lender that will make such a loan. Those who do are charging well above market rates, and hoping that you don't default until inflation has driven up the value of the collateral and your payments on you first loan have reduced the principal a bit.
I would think the only solution here would be to find a legitimate debt counseling service and see if they can straighten out the mess.
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