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URL:  http://boards.fool.com/the-thought-of-re-setting-the-time-clock-back-to-30356519.aspx

Subject:  Re: Bankrupt or try to 'gut it out'? Date:  11/2/2012  11:48 AM
Author:  aj485 Number:  306221 of 308883

The thought of re-setting the time clock back to ZERO . . . is not very appealing. However, if I can re-fi with a 15 year and still pay pretty much what I am paying on mortgage number 1, then that would be a good deal.

You probably could get a pretty similar payment. Current 15 year rates are running 2.5% with no additional points, and even rolling in $5k of closing costs (since I assume you don't have this amount to pay out of pocket), your P&I payment would be $657 or so. This compares to a P&I payment of $643 on a 30 year fixed mortgage at 5.6% with a starting balance of $112k. However, you have several hurdles to overcome:

- Your total LTV will be above 80%, meaning you will probably have added PMI costs, increasing the costs above your current payment
- With $30k in credit card debt and a $45k documentable income, your debt to income ratio may be too high to qualify
- You will have to get your second mortgage to subordinate to the new first mortgage
- You will have to find a first mortgage lender who is willing to take on a loan with a second mortgage

And even if you can do the refi, it still doesn't decrease your monthly required cash flow (and may increase it), nor does it address the issue of you and your wife not being on the same page financially.

Balance on mortgage number two is about 28K (it has about 14 years left to pay it off)

Are you sure that the 2nd mortgage will actually be PAID OFF in 14 years? If the monthly payment on this mortgage is about $165, it will likely have a balloon payment of about $17k due in 14 years, rather than being paid off. In order to pay off this mortgage in 14 years, you need to be making payments in the $235/month range.

AJ
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