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Hi folks! I had so much help here when I bought my house that I figured I'd pop back with some refinancing questions.

I bought my house in October with a 80-15-5 combo. I'd like to refinance, but I'm wondering how the 2nd mortgage is handled. Can I do two refinances to get lower interest rates on both mortgages? I guess I could roll them over into one mortgage, but then I'd be back to paying PMI, right?

Any suggestions for what to ask for in this situation? My 1st rate (30 year fixed) is at 6.25% and my 2nd (15 year with a balloon) is at 8.125% if that makes a difference. I have good credit and I'd like to avoid paying closing costs. Both my mortgages are with the same lender right now.

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I have good credit and I'd like to avoid paying closing costs.

You'll pay it one way or another.

You won't beat that 30 year by too much - but you might look into changing the 15 year balloon to a home equity line, now at 4.25% - most are free, or maybe $50 a year to maintain.
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I just received an email from a mort. broker offering 5% on a 30 - so certainly something like 1.25% would help you, depending on the size of your loan.

I'm getting recommendations to revert to a HELOC on the second as well

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I have a very similar mortgage to yours! Except my first mortgage is at 6.75% since I closed in 2001. There are several lenders which will offer you a no cost closing option (you only pay for the appraisal). So for a cost of about $300 you can refinance for a lower rate. Of course the rates are not as low as say if you were to pay the closing cost upfront. The lender just charges you a higher interest rate (closer to .5 or more). I am currently working to refi my mortgage that way. I may not have a second loan if the appraisal comes out well, then I just have one 30 yr fixed mortgage. Check on and see if any of the lenders will offer you the no cost closing. Good luck.
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Hi Rebecca,

You are definitely in position to significantly improve your financed position.

KEEP IN MIND the timing strategies...

If you're CERTAIN you prefer the higher-cost 30 FRM (in spite of the 95% odds it will last you less than 10 years,) then remember that every dollar rolled into the interest rate (by having the lender pay some or all closing costs with higher interest) has a Break-Even of 3-5 years.

That means that after 3-5 years you start LOSING money you would otherwise have saved had you taken a lower rate today, and simply paid the closing costs in your principal loan (or out of pocket.)

Alternatively, every dollar you are able to roll into your actual loan amount which reduces your final interest rate CREATES A SAVINGS after 3-5 years, and accelerates your final payoff (if you pay the same amount as though you had financed at the higher interest-rate "no points" loans.)

Don't get blinded by the "free candy" advertisements the industry provides the public (who demands them.)

Rates are extremely unlikely to ever get low enough to have anotehr refi make financial sense... so there's no reason to hedge your strategy toward a future refi for lowering a rate.

Do EVERYTHING YOU CAN to get your current rate AS LOW AS POSSIBLE... including buying the rate down with financed discount points, and financing the closing costs.

Properly done, you can reduce what would otherwise be a 30 year term down to 22-26 years, or less.

Dave Donhoff
National Mortgage Broker/Banker
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