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How (or can) I refinance a Home equity loan (2nd mortgage)?

I have a home in Manahawkin, NJ 08050 that is a rental property.  It has a first mortgage that I recently refinanced and a home equity loan (2nd mortgage) that I took out to avoid PMI however the interest rate is 8.9%.  Both loans are currently held by Chase.  Can I refinance just this 8.9% home equity loan to get a lower rate?  With who?  And how?
  • February 22 2014 - Manahawkin
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Answers (2)

Lauren, you took out a 2nd to avoid PMI, and supposedly to make your payment lower. The reason owner's must pay PMI is because you do not have at least 20% equity in the home. Once you meet that amount of equity, or now in many cases 22% equity, you can have the PMI removed by refinancing into  only 1 loan. You can try another lender, but keep in mind, the less equity you have, the more risk to the bank of you defaulting on the loan. The more risk= a higher rate.If property values have increased in your area, you may have enough equity to refinance into 1 loan, but new rules restrict lenders from refinancing unless they can lower your payment by 5%. There are 2 terms you should become familiar with in your present situation, subordination of the loan and the difference between a recourse loan and non-recourse.Both deal with equity lines. My experience in lending for a major bank often points to conservative valuations on their appraisals. My best advice is find a broker that can give you at least 3 good comparable properties within 1 mile radius of your property and tell you if your property should appraise for a value that would have enough equity to remove the pmi and you can still take advantage of today's rates. Good luck
  • February 22 2014
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Possible but not likely. If I were your loan officer I would have only needed 1 loan to refi you and I would have done it without pmi. Look me up through my profile and maybe I can still help with no closing costs to boot.
  • February 22 2014
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