Question

Jill has a property that appraises for $189,000. Her first mortgage rate is 4.75% and her second mortgage rate is 15%. She has decided that she wants to leave her $53,000 first mortgage alone and just refinance the second. She qualifies for an 85% CLTV. Her second mortgage is for $25,000 but she wants cash to finish her basement. She has $81,150 available as cash. What is her new second mortgage loan amount if the closing costs are $1,500 and Jill would like to finance them

Answer 1

Answer:

The new mortgage loan is $106,150

Explanation:

The computation of the new second mortgage loan is shown below:

But before that determine the maximum loan amount which is

= $189,000 × 85%

= $160,650

Now the second mortgage loan is

= maximum amount - first mortgage - closing cost

= $160,650 - $53,000 - $1,500

= $106,150

Hence, the new mortgage loan is $106,150