Posted on: 10th Dec, 2008 10:02 am
i have a 1st mortgage on my home which i owe 118k @ 5.875% . i took out a home equity loan(2nd mortgage) to purchase a 1/2 ac custom home build lot which was financed for 69k @ 8.437%.
i have the opportunity to refinance both loans back into a single mortgage, which would amount to 97% of my home's value @ 5.5% (approx. 200k).
reason i was wanting to do this is because i would like to sell my vacant lot but may either sell at a loss or break even. problem would be i may not be able to payoff the 2nd mortgage if i sell the land at less than owed.
if i am able to refinance into one loan against my home, would the land be payed in full without any liens from the bank? and if is, does this allow me to sell my vacant lot at less than the purchase price, thus pocketing the money to either paydown my new mortgage or use how i please?
is this refinance plan a sound idea to allow me increased flexibility to sell the vacant lot at a loss if i need to?
ps. minus prepaids and advanced mpi payments, the refi would cost me approx. $3500 with $1500 of that out of pocket. my overall payments would decrease by about $200/mo
thanks in advance,
jon
i have the opportunity to refinance both loans back into a single mortgage, which would amount to 97% of my home's value @ 5.5% (approx. 200k).
reason i was wanting to do this is because i would like to sell my vacant lot but may either sell at a loss or break even. problem would be i may not be able to payoff the 2nd mortgage if i sell the land at less than owed.
if i am able to refinance into one loan against my home, would the land be payed in full without any liens from the bank? and if is, does this allow me to sell my vacant lot at less than the purchase price, thus pocketing the money to either paydown my new mortgage or use how i please?
is this refinance plan a sound idea to allow me increased flexibility to sell the vacant lot at a loss if i need to?
ps. minus prepaids and advanced mpi payments, the refi would cost me approx. $3500 with $1500 of that out of pocket. my overall payments would decrease by about $200/mo
thanks in advance,
jon
Hi jon,
If you have the opportunity to refinance both the loans into one, then you should go for it. It is always better and easier to handle one mortgage rather than two.
If you can pay off the land loan in full, then banks cannot place a lien against your property. However, check out if there is a pre-payment penalty clause in the mortgage docs. If there is no pre-payment penalty clause, then you can go ahead and pay it off.
You can definitely sell off the land but if there is a loan on it, then the lender may ask you to pay off the loan immediately. But why do you need to sell off the land at a loss? You have mentioned that:
"I may not be able to payoff the 2nd mortgage if I sell the land at less than owed. "
In that case, I would suggest you not to go for it. The second mortgage lender will have the right to charge off your mortgage even.
Thanks
If you have the opportunity to refinance both the loans into one, then you should go for it. It is always better and easier to handle one mortgage rather than two.
If you can pay off the land loan in full, then banks cannot place a lien against your property. However, check out if there is a pre-payment penalty clause in the mortgage docs. If there is no pre-payment penalty clause, then you can go ahead and pay it off.
You can definitely sell off the land but if there is a loan on it, then the lender may ask you to pay off the loan immediately. But why do you need to sell off the land at a loss? You have mentioned that:
"I may not be able to payoff the 2nd mortgage if I sell the land at less than owed. "
In that case, I would suggest you not to go for it. The second mortgage lender will have the right to charge off your mortgage even.
Thanks