To build, buy, or refinance. Call our experts at: phone icon1-844-422-3622

Refinancing a Home

Members Refinance in Just Three Weeks to Pay Off Second Mortgage

2022-06-03

Anthony and Tanya Brown both served their country for more than 20 years – he was a U.S. Army Infantryman and Military Police, first serving as an Administrative Specialist and then as an IT Specialist. They joined AAFMAA in 1996 while stationed at Ft. Myer and the Pentagon in Virginia.

When they separated from the military in the mid-2000s, they bought a home in Pennsylvania with an interest-only conventional loan and a second mortgage for a bigger down payment with a 7.65% interest rate, but no private mortgage insurance (PMI). Then the housing market crashed, causing home prices to plummet, too.

As time moved on, home prices recovered and interest rates started to drop. They would eventually reach their lowest point during the pandemic.

People use second mortgages for many different reasons, points out Damon Madlock, an AAFMAA Mortgage Services’ (AMS) Military Mortgage Advisor. “With a VA Loan, homeowners often use second loans to pay for home improvements or consolidate or pay off debt,” he says. “Homebuyers using a conventional loan, on the other hand, will use a second mortgage for the same reasons and, like the Browns, to help them boost their down payment to avoid having to pay for private mortgage insurance (PMI).”

Getting a Second Mortgage

The loan is called a second mortgage because your purchase loan is the first loan in line for repayment should the home go into foreclosure.

Typically, second mortgages carry higher interest rates than purchase loans – though they are lower than unsecured personal loans, such as credit cards. One advantage is that you can often write off the interest paid on your taxes. (Consult your tax professional for details.)

Related: Your Cheat Sheet of the 11 Most Important Mortgage Acronyms

Tight Turnaround

The Brown’s received a letter from the servicer of their second mortgage in November 2021 informing them that their second loan was coming due and payable in February. This meant the entire amount had to be paid in full or refinanced at potentially a higher rate – and in just a few months.

They contacted Madlock in December and although the timeframe would be tight, he agreed to help them refinance their loan so they could pay off the second mortgage. “Generally, cash-out refinances take 30-45 days, but we had to move very quickly on this so they would have their money in time to pay off the second,” says Madlock.

Madlock explained the refinance process to the Brown’s and emphasized that they would need to work together, and very quickly, to close in just three weeks. Luckily for the Brown’s, the value of their home had increased, they had maintained very good credit, and mortgage rates were still near historic lows.

They were able to secure an interest rate of 3.25%* on the new loan.

Working Together

Madlock sent the Brown’s a very comprehensive list of the documents they needed to gather and submit for the refinance. “For this transaction especially, the Members and I had to stay engaged and respond to any request from the underwriter very quickly to keep things moving while meeting all regulatory requirements,” says Madlock.

There were daily calls and emails to ensure the deal stayed on track. “Damon was awesome,” Anthony told us. “We’d gone through the mortgage process before, so we knew it would be complicated and stressful, but this time we felt we had a partner who was helping us at every step.”

The Brown’s stayed on top of what was needed and when they had to sign or initial documents. They used AMS’s secure web portal for uploading documents and communicating with the AMS team.

They closed on their refinance in mid-February and, with the funds from the refinance, paid off their second mortgage loan.

“It was a really great process,” says Tanya. Damon was very proactive and professional… it really couldn’t have been any easier,” she says. We would highly recommend Damon and the AMS team.”

“The Brown’s were great to work with. We talked a lot and I enjoyed working with them,” says Madlock. “But even if I am just the silent helper, that’s okay too. We go above and beyond to do the right thing for our Members. That’s what AMS is about.”

We’re Here to Help

Whether you’re just thinking about buying, ready to start home-shopping in earnest, or thinking about refinancing for cash-out to consolidate debts or make home improvements, an AMS Military Mortgage Advisor will be happy to assist you. We will provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring our Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-244-0564!