100% financing zero down mortgage northern virginia

Virginia mortgage rates and industry news

Second mortgage meltdown

November 29th, 2007 5:39 PM

Got a second? No....seriously. If you do have a second mortgage or line of credit like many Americans do, there is good and bad news for you.

First, the good news. If you have a line of credit, you've probably seen a decrease in your monthly payment, as the prime rate has gone down over the past few months. The advantage of your line of credit, although a variable rate mortgage, is you can draw off the "line" until you've reached your maximum loan amount. Many lenders will now allow you to convert that variable line of credit into a fixed rate loan. If the rate and payment works, do it! There will be no guess work to you payment in the future.

Now....the bad news. If you took out a second mortgage in the last 5 years and maxed it out, you may have also maxed out your equity in your property or be upside down at this point. I'm not aware of a single bank right now that will refinance someone that is currently "upside down" on their home. You'll have to suffer with the payments until your home's value increases or pay down your loan below the appraised value.

Lastly....second mortgages are harder to find these days. Unless you have decent equity in your home and great credit, don't expect to get a second mortgage anytime soon. Lenders who offered this type of loan have taken a financial beating over the last year and are much less willing to take excessive risks considering their position on title.

Ok....my last thought...Resubordination.....um...what?

Resubordination is the term lenders use to move your existing second mortgage back in "second" place on title when you refinance just your first mortgage. What am I getting at here? If you have an adjustable rate first mortgage AND a second mortgage and want to refinance just your first mortgage, you'll have to "resubordinate" your existing second mortgage behind your new first mortgage. This process is typically completed by the mortgage professional that is refinancing you and is a fairly simple process, provided you meet the bank's requirements.

Got questions or comments? I'd love to hear them!

Posted by Paul Thistle on November 29th, 2007 5:39 PMPost a Comment (0)

Declining values spell trouble for refinancing

November 14th, 2007 2:22 PM

Do you live in a cookie cutter neighborhood in Northern Virginia like I do? Unless you live under a rock, it's hard not to notice all of the "for sale" signs, but you'd be surprised to find out just how many homes in your neighborhood have foreclosed or are "short selling". Foreclosures, distressed sales, and short sales are driving all of our values down, and will affect your future ability to refinance your home no matter how good your credit is. Once you owe more than your home will appraise for, you are stuck in that loan until your value increases, or you are willing to pay down your mortgage. If you still have decent equity in your home, but have an ARM that will adjust in the next 1-4 years, you may want to refinance into that fixed rate NOW rather than wait. Fortune Magazine listed the Greater Washington D.C. area as one of the top declining markets in the country. Don't wait until it's too late to refinance. I talk to many folks every week who waited to long, and no longer have the option to refinance and must suffer with their existing adjustable mortgage.

Posted by Paul Thistle on November 14th, 2007 2:22 PMPost a Comment (1)