Refi an 80/15/5? When?

[Anonymous]

Hey y'all,

I bought a house last year using an 80/15/5 loan.  The fixed (80) is a 30 year at 6.5%, but the 15 is crazy at 8.775%, and it's adjustable. 

I'm hoping this isn't one of 'those' questions that comes up every two days, but from the beginning of ownership, I've been plotting on doing a refi to get rid of the second mortgage.  The  housing market in NE North Carolina is slow right now, but I anticipate seeing a bit of a rise in the next year or so as this area continues to develop.  What I'm asking is this: When does it make sense to refi?  I like the stability of the 30 year fixed, but the 15% scares the crap out of me.  Should I make an effort to pay the smaller, second mortgage down quickly?  Or consider a refi? 

I may sound weird here, but I am not looking to 'flip' my house. I bought it for about 195K, and it appraised a month later at $198K, but I'm not looking to pull out cash or anything, and don't want to go from making payments on $185K to making payments on $210K (or whatever the case may be).  I'd simply prefer to get rid of the second mortgage! 

I have the VA available (we didn't use it the first go-round, the DTE was too tight because my wife wasn't working yet), and I have a neighbor who just got a 5% 30 year fixed through them...anyone know anything about that?  Anyway.  Thanks in advance for any help, the first go-round made me dizzy, and refi's seem worse!

[Anonymous]

I'd pay off that 15% loan ASAP. Then maybe between appreciation on your house value, and actually having 20% equity, you can ask them to knock of the PMI you're paying. You can try some online calculators, but the main thing is to just get the principal down on that second loan fast, and get rid of it before it adjusts.

[ShanetheMortgageMan]

Apply any extra payments towards the 2nd mortgage.. the good news is that the Prime rate (the index your 2nd mortgage is probably based on) isn't likely to increase anytime soon.  If your credit score is excellent you can refinance the 2nd mortgage into a fixed rate 2nd mortgage for low/no closing costs at a few different lenders... for that I'd start with your own bank/CU first.