Mortgage Blog

Q: My First Loan amount is 417k with 2nd Loan 200k.
The property Value is 650k. Can I get better rate
if I choose FHA loan with loan amount 617k.

A: Let me try to answer your question by the risk
management. With only 33k equity in the property,
the lender has some risk for keeping your loans.
So usually they will have higher rates. But when you
have piggy back loans, the risk for the two loans are
different. Your 1st loan lender has minimum risk.
So if you defualt in the future, the first loan
lender can get almost all the money back.
But the 2nd loan lender is different.

Now back to the question of consolidate the two loans.
The risk will get back to only one lender with
only 33k equity for 617k loan, if the lender would
get you the loan, the rate will be very high.

Plus, any loan amount over 417k will have the rate
around 0.25% to 0.375% higher; and the if this is
cash-out loan(2nd loan is not the original at the
purchase), this loan is not doable.