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Advice on refinancing second home

Mark Cappel
UpdatedJan 30, 2008

What time is best for me to refinance my second home?

I'm thinking about refinancing my second home. Will I have to pay PMI? I currently have a 15 year mortgage and put $50,000 down; I want to convert it to a 30 year mortgage on take my $50,000 equity out. It really doesn't matter if the payment is still around the same amount I'm paying now ($2105/month). The house has been on the market for a while and it's not moving. I've had some offers, but the appraisals are coming in about $45,000 below what we think the value is and about $25,000 below the offers I'm getting. I want to rent out the second home until things pick up. I was waiting on the sale of the house to get my down payment back, to do upgrades on my current home. The house appraises at $226,000 now, when I bought it 2 years ago it appraised at $245,000.

Thanks for the question. It sounds like your current mortgage balance on your second home is around $195K and the value is (at least from the lenders perspective) $225K. You'd need at least 15% equity on the home BEFORE you started taking out cash, so I don't think that's a viable solution for you at this point. You've got the right strategy - rent out the house (try to at least break even on your monthly cash flow, i.e. rent received = mortgage payment paid) and hold on to it until values come back in your area. It sounds like you'll have to put off the upgrades on your current home until that happens. Lastly, I'd suggest that you talk with a mortgage broker or lender, as they will evaluate your situation more closely and provide more absolute answers. You can use our lender matching service to find trusted lenders by providing your loan information here: Refinance Quote.

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