Can I refinance my First and Second Mortgage into one loan?

Mortgage and Lending with SWBC Mortgage 740662


Thinking about combining your first and second mortgage into one loan.LTV is?  

Maybe you can.  The current guidelines that make this more of a challenge  now than it used to be.  With the 3 most common loans today they all have different ways of looking at the second mortgage. 

Conforming Conventional Loan.   Treats a second mortgage as cash out.  Therefore the loan will be maxed out at 85% loan to value (LTV.)  Currently MI companies are not insuring cash out transactions above 80% loan to value thus bringing the LTV to 80%.

VA loan.  VA will allow a refinance up to 90% Loan to value.  Good choice if the borrower qualifies.  No MI. 

FHA Loan.  This is the loan with the greatest potential for combining the first and second mortgage.  FHA will allow the second to be treated as rate and term if it has been seasoned for at least 12 months and if a line of credit not drawn on in the previous 12 months.  As a rate and term transaction FHA allows a LTV up to 97.75 on a refinance loan.  

In combining the first and second together the borrower can reduce the amount of interest they are paying as well as improve cash flow due to the lower total monthly housing expense. 

The Fed has indicated they will not purchase mortgage backed securities beginning the 1 April.  This is expected to cause a rise in mortgage interest rates.  With this in mind it might be wise to talk to a mortgage consultant to see if combining you first and second mortgage into one FHA loan would prove to be a benefit. 

Contact Lee Barroll at 615-243-1301 or visit my website at


Comments (2)

TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

Great news for folks that need to refinance...

Mar 21, 2010 11:58 AM
Franklin & Brentwood, TN Homes Mike Nastri
Keller Williams Realty - Franklin, TN
It matters to us as much as it matters to you.

Thanks for the update on combining and refinancing.  This can help a lot of people save money and reduce their monthly cash outlay.

Mar 21, 2010 04:30 PM