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You want to know if you can refinance a second mortgage. Yes, as a rule you will be able to if you have the equity in the property that will allow you to do so. If you have qualifying property you will be able to renegotiate the terms of the note. There are two types of second mortgages that are offered by lenders. One is a fixed rate loan and the other is the home equity line of credit (HELOC). The HELOC is a revolving account that will be discussed below. If you have either of these types of mortgages in the secondary position on your home, you will be able to renegotiate the terms of the note. We’ll look at the fixed rate first, then the HELOC.

You can refinance a second mortgage into a fixed rate interest loan if you want better terms. You will have regular monthly payments just like on your first mortgage. You can make large payments against the principal, but you will still have to make the monthly payment until the note is paid in full. When you have repaid all the money you borrowed on the second note, then the note is closed and the second lien is released. A HELOC can be used multiple times.

If you can refinance a second mortgage into a HELOC you will have money available each time you make a payment against the note. You will be able to draw out, or cash-out, money in an amount that is a percentage of the equity that you have invested into the house. You pay interest on the amount of money that you use from the HELOC. A HELOC is an adjustable rate mortgage so you will have to be aware that the low interest rates that are available today may not be available tomorrow. As the rate of interest charged increases, you will have to pay an increasing amount of interest on your HELOC.

If you want to, you can ask the lender to combine your two mortgages into one payment. Remember that you must carry private mortgage insurance (PMI) if both loans exceed 80% of the fair market value of your home. If the proceeds of the secondary note were not reinvested into the home, then the lender will probably require you pay a higher rate of interest. There are government programs that are backed by the federal and state agencies that will help you with your second mortgages. The Making Home Affordable program is sponsored by the federal government for those homeowners who are upside down on their home loans as a result of the recent housing industry crisis. Your question, ‘Can you refinance a second mortgage?’ is a definite yes, but you must qualify by meeting the lender requirements.