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Home Equity Line of Credit and Refinancing

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Question:  I have both 1st and 2nd with BoA, i received a letter saying that new payment for my home equity line of credit starting this month (june) include principal and interest. I called BoA but they can not do anything for me since my first was re-financed in 2010. Is there any suggestion? I great appreciate anything that would help my payment more affordable. Thanks

Answer:  – You have a few options. If your credit is still good, income is consistent and you have equity you might try to refinance with a different lender that will combine your payment into one. This can be difficult if any of those 3 are left out. Right now with the right lender and qualifications, you can refinance your home equity line of credit with an interest rate between 3 and 4 percent. With those kind of rates, you can really get your mortgage payment reduced.

The other option would be settle your 2nd mortgage and pay it off completely. If you have a case where your home is worth more than what you owe or you have negative equity, you might be able to get the lender to agree to take less than what is owed as full payment. By going this route, you get to stay in your home, keep your good credit and reduce your mortgage payment considerably by eliminating your 2nd mortgage. It’s a great way gain equity or for a lot of homeowner at least get rid of negative equity. We settle note for homeowners if you don’t want to do it yourself.

We have an interest only mortgage on a house…

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Question: We have an interest only mortgage on a house that is now worth about half of what the the mortgage is. We have not missed a payment and there is a penalty to refinance. What is the best way to handle this situation.
Frank in Florida.

Answer: This seems to be the ongoing trend these days…houses worth a lot less then the mortgage. Unfortunately, even if you threaten them you’re going to foreclose, they typically want you to “prove it” or show them your hardships for needing help. Only after you stop making payments to they become motivated to do something. But then your credit has been hit and refinancing becomes very tough to do. So then you try a loan modification and still it’s not 100% your lender will do a modification. So I guess you need to weight out what it’s going to cost you in penalties and fees to refinance and see how long you need to stay in your home at the new interest rate to make it worth your while. My guess is that it could be 6 -10 years before you even hit a break-even point depending on your penalties.

If the total LTV between the 1st and 2nd liens add up to 100% or less, is there any way to add the 2nd to the first?

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Question: If the total LTV between the 1st and 2nd liens add up to 100% or less, if the 1st lien is up to date and the 2nd lien is past due for more than 2 months, is there any way to add the 2nd to the first, even if they are with two different lien holders?

Answer: -NO. You’ll have to refinance. If the property is at 100% LTV already and the lending industry being what it is now plus having a few lates on your credit, chances are it will be very challenging to refinance this property into 1 loan.