How difficult would it be to refinance a second mortgage?

Question

Some years back, my mom, now 80, took out a second mortgage on her house. I don't think it was a wise decision, but of course we can't do anything about that now. She recently complained that most of the payment went to interest and only a tiny amount to the principal. Then this week they came after her for a payment they said was late, although she and her bank can show it's not. I looked them up on Yelp, and there were dozens of one-star ratings and nothing any higher than that. It looks like everyone hates this company. I know nobody likes paying their mortgage, but there were some major red flags in the comments, and now I'm nervous about continuing to deal with them if we have to.

My mom has some cognitive decline that would make it difficult for her to manage a transaction like this, but I am more than willing to handle things if it will put her in a better situation. But I have never bought a house, so I'm not sure what I'm getting into. Am I being too hasty in this? Is it worth the trouble to try to find a more reputable lender at possibly a better rate (I don't even know right now what her rate is on that loan).

I've been doing some Google searches to get tips on mortgages and selecting a lender, and plan to talk to friends and relatives with more experience in this area. Are there any major pitfalls to avoid?

Answer 1

There are three reasons to refinance:

• To reduce one's interest rate
• To extend the term and improve cash flow
• To pull cash out for a worthy purpose.

If her goal is simply to avoid a bad customer service experience, I don't know that the expense of refinancing is worth it. If one of three above come in to play, it may be worth pursuing.

To address her payment issue, I'd use a bank's bill pay service where she can produce proof of the on time transaction. If they claim she's late she shows the proof and warns them no to bully her else she'll get the federales involved.