Website design By BotEap.comYou initially chose an 80/20 or 70/30 loan for one of two reasons: You don’t have available funds for a down payment, or you want to avoid having to pay private mortgage insurance (PMI). You have two loans: one for the majority percentage of the mortgage; the other for a minority percentage value that is usually used as a line of credit. Refinancing isn’t always possible on these types of loans, and it’s not always wise.

Website design By BotEap.comRefinancing a loan may be a good idea if the interest rate you qualify for is lower than the rate you currently have. This may be especially attractive to you if you have a variable interest rate.

Website design By BotEap.comHow to know if you qualify for a refinance

Website design By BotEap.comIf you owe more on your current 80/20 or 70/30 loan than the current value of your property, you will not be allowed to sell your property, or refinance, until you pay off your loan. Keep in mind that if property values ​​in your neighborhood have been rising, the amount you owe may actually be less than the value of your property. You may want to get an appraisal to find out.

Website design By BotEap.comHow does an 80/20 or 70/30 mortgage refinance work?

Website design By BotEap.comAn 80/20 or 70/30 mortgage refinance can provide options for the borrower. For example, you may find it worthwhile to make a balloon payment and pay off the smaller loan amount and purchase a lower interest rate on the remaining amount owed on the larger loan.

Website design By BotEap.comIt may also be possible for you to refinance both loans and purchase lower interest rates and lower monthly payments if you want to keep two loans. You might even qualify for a new second loan that gives you a new, higher line of credit.