A significant number of my personal acquaintances purchased homes (newer, larger) within the last several years. Inevitably, they were also convinced that financing via an 80/20 first/second mortgage setup was the way to go. Doing so is "financially smart," because it allows them to avoid paying private mortgage insurance.

It's an idea that works ... until it doesn't. Consider this Baltimore resident's story, for instance:

Baltimore Sun: "Some Lenders Block Refi Ability"

He needs to refi out of his nasty ARM first mortgage — he's lucky, in that he does have decent equity in his home — but his second-mortgage holder won't agree to a re-subordination.

Under any circumstances.

Rut ro.

Labels: Homeownership, Mortgages