[quote=moneymaker]Yes the second is a HELOC, it was to purchase solar, so if it costs $250 to subordinate or $500 for ETF I guess the difference is kinda small. I was hoping to not have to pay anything like most people. I guess if I don’t like the final mortgage contract I can spin the interest rate wheel and hope we go down even more. Thanks all for your input, it is stuff like this that needs to be taught to our high school kids before they graduate. I don’t regret buying solar or refinancing twice but I’ll have to admit I didn’t see this coming, who knows it may not be a problem at all. By the way HLS the loan people have not brought it up but we all know how they like to spring things on us at last minute, we have been conditionally approved and are at the underwriting/funding stage.[/quote]
One thing to also consider:
What is the penalty on the second?
What is the interest rate on the second?
How big is the second?
Generally (not always) a cash-out refi boosts the interest rate you are paying up 0.5%. Run the numbers with the cashout vs subordination and see which results in lower total costs.
If the second has a significantly higher interest rate than the first and combining still keeps you out of PMI(if you currently are out of PMI) – it might actually benefit to combine and take the hit on the new first’s interest rate – you got to run the numbers for both to know. I don’t have enough info of your situation to do that.
Where interest rates are going: I don’t think they will head up in the next 3 months. In the next 6 months, not certain. If up, not by much. Brexit has shaken the market and there are still a lot of unknowns. I don’t think the Brexit is as bad as claimed, and it might be better for the Brits in the long run.
NOTE: An increase in interest is not quite as bad as most people think. Remember that mortgage interest is tax deductible. To get the real ‘effective’ rate on your disposable income, use your marginal tax rate (amount that each additional $ of income increases your tax). So, if you are in the 30% total (fed and state) marginal tax bracket, real interest rate increase would be 0.005 * (1 – 0.30) = 0.0035, or 0.35%.
