Have any of you bought property with 2 mortgages at the same time?
Let’s say: 1M house, 20% down, so 800K need to be loaned. Say I want 500K in 30yr fixed and 300K in 7/1 ARM. The idea is I wanted to pay off 300K in next few years without worrying about refinancing. Not sure if it is possible at all for primary home.
You can. Usually the first is a mortgage and second is a HELOC product. You can’t have two “mortgages”, but you can accomplish what you want.
Just finding out about the terms recasting too:
Just paying towards principal?
Not sure what your question is. By paying extra principal, you reduced the loan term but not reduced the monthly payment. My idea is I might be okay with high monthly payment at this time, but want to reduce it in the future but keeping the term I am signing since likely 30 yr fixed rate in the future might not be this low to refinance.
I mean how is recasting different from paying towards principal - you can already do that when doing monthly payments.
If you pay down extra principals every month, it reduces the loan term. Says your mortgage is $2500 / month and terms is 30 yrs. By paying down extra $500, might takes you to paid off the loan in 20 years but you pay $3000 / month for that 20 years. Also applies to lump sum payments towards the principals, you paid off in 20 years but still keeping original monthly payment
Recasting is if you pay lump sum payment towards the principals, and now your monthly payment is $2000 instead of $2500, but loan term is still 30 years.
ah right, forgot that. i think wfb would let you recast with a hponecall.
Generally speaking, isn’t the second loan typically more expensive interest wise so that it makes more sense to get it all in the first loan (if possible) since that is a primary home loan, and then just pay extra each month if you want to accelerate it down as you wish or can?
That won’t lower the payment for you later though. You can recapitalize the loan which will change the monthly payment. To do that, you usually need to pay all the extra principal at once. You pay them the $300k, and they recalculate your monthly payment based on the new loan balance. You should keep the same payoff date and interest rate.
True, but that’s why you get the best rate for what you plan to do. In my case, I am not planning to hold longer than 7 years anyway, so why pay for that higher 30 or 15 year rate? Should rates miraculously drop (not likely, but you never know) during those 7 years, my trusty Tracie will call me to consider refinancing at that point. I probably would have acted differently if I were much younger and if it were my primary home to begin with.