Your monthly car payment is usually one of the biggest financial obligations that you have every month. Besides your mortgage payment, most of the time, the car payment is the second largest payment each month. One way that you could potentially address this is by refinancing. Here are the basics of refinancing an auto loan to lower the payment. How it Could Help Refinancing an auto loan could potentially lower your payment in a few different ways. When you initially take out an auto loan, the term is usually for around 5 years. Each and every month, part of…
Reduce Your Car Loan Monthly Payments by Refinancing
Posted by admin on May 14, 2010 in auto loans with bad credit · 5 Comments
Pay PMI or second mortgage loan?
We’re refinancing and our home value has dropped causing us to pay $105/month in PMI, but we’re still saving $100/month with the lower interest rate. Our LTV is at 83.4% and once 80% LTV is reached we’ll have no more PMI. This could take a few years depending on the housing market.
The other option is to take out a second mortgage and pay that/month, but it will take longer to pay off the second mortgage in my opinion than it will to have PMI removed. With the second mortgage I’ll be saving about $28/month vs paying the PMI. Second mortgage increases monthly payment by about $132/month and is based on Prime + 1/2 so it will change each month. It will never be less than $100/month no matter what balance is left and every $1000 knocked off the second mortgage balance reduces your monthly payment by $12.00.
So if housing market improves I should reach the PMI cancel point faster than paying off second mortgage loan, but I pay $28/month less with second mortgage loan vs PMI… Once PMI is finally off we’ll save $210/month because of the lower interest rate and no PMI. Just in the interm we’re only saving $100/month with lower 30 year interest rate. Second mortgage loan when paid off will allow us to save $267/month but it will take longer to get there and until we get there our payment for the second loan is not at a fixed rate.
Any recommendations on what to do?
For the ones that said PMI, why though? In this housing market it could take a long time to get PMI off of your home when you never had it in the first place.
Probably pay PMI since it’s nearly impossible to combine two later in a refi. You are lucky to be able to refi at all. Also, I’m no expert but I wouldn’t count on getting rid of the PMI. What makes you think your LTV will drop anytime soon? Unless your house goes up in value, probably not.
UPDATE: Let me let you in on something I am going through which just about ANYONE could be or will be going through. These greed motherf*cking no good BAILED out banks just don’t care anymore. They don’t do REFI’s for anyone except people that don’t need them anyway. If you are self-employed like me and actually MAKE your payments like I have been … they won’t even talk to you about a refi unless you have loads of declared income on line 37 of your return. In other words, they would rather wait for anyone to miss payments and go into foreclosure before even thinking about helping out. Even then, they might not. For that reason, I’d go with the PMI. Go with any option that will NOT require a refi in the future because honestly you probably won’t get it or it won’t be near what you think it will be. FACT.
Another thing, consider yourself real LUCKY to have such a low LTV at this time. I don’t know how you have that, but understand you are in the minority. Hopefully you’ll stay there, and maybe go even lower because most of America’s homes have simply lost a lot of value in a short amount of time and are continuing to lose value. I live in a "good" market area and my house has still lost too much.
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I’m not a fan of the 2nd mortgage to avoid the PMI. I think a lot of lenders get over their heads with them.
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PMI.
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hey,Superb blog post dude! i’m Tired of using RSS feeds and do you use twitter?so i can follow you there:D.
PS:Have you thought to be putting video to this blog to keep the people more entertained?I think it works., Larraine Poynor