How to Refinance a Second Mortgage

If you have found that your mortgage is a little outdated and you think you can get a much better deal, then it is time to consider refinancing with a second mortgage. This can be done rather easily with many lenders wanting to give you their money.

Difficulty: Easy

Instructions

1. Look at your mortgage to determine if there are any penalties for paying it off early.

2. Determine how much you would like the new mortgage to be for. This should include any amounts needed to pay off all existing debts and other high interest loans, credit card debts, and so forth.

3. Calculate the cost of any remodeling or additions you need to have done to the house. Add this figure to the total.

4. Decide how long you intend to live at the current address. You should probably plan on living there at least another 7 to 10 years. If you are planning on moving in a couple of years, a second mortgage is not worth the cost to you or to the lender.

5. Get all the information about your current house together, including its current appraised value, balance on mortgage, years left, etc. This will all be needed for your application.
   

6. Get your online estimates and compare carefully. Don't try to compare apples with oranges. Rather, line up the different types of loans (fixed and adjustable rate loans) together, and be sure to get cost and fee breakdowns on each offer.

7. Negotiate for a better deal once you've narrowed it down to a couple of offers.

8. Commit to one lender and sign the paperwork.

Tips & Warnings

• Before applying, learn all you can about financing and the terms involved. This is for your own good as the more you know and research, the better deal you can get.
• Most second mortgages have a little higher interest rate and less time to pay it off than a first mortgage. A secured loan has less interest than an unsecured loan.
• An online estimate is only an estimate, therefore the figures are not exact, just approximate. Exact figures can only be given with all your details, a credit rating, an appraisal, and much more.
• Be careful with any website that you are not sure is secure. For an estimate, you should not need to give away anything that is really personal, like your social security number or any other personal information.
• Watch out for contracts that have an Early Redemption Charge (ERT) in them. This simply means, if you see it in there, you will pay the lender a charge even if you pay the loan off early. Although there will be a discount, it will cost you to pay off the loan. Attempt to get them to take it out of the contract, or you should find another lender.