Should I have any concerns about trying to refi on a 2nd that has a fixed rate on 15 yrs. but with a balloon?

Question

payment due at the end of the 15 yr. term. Of course I would be doing the refi long before the 15 yr term.

I have had excellent credit for 15+ years so unlikely that will change. I have maintained this through a lay off, cancer, etc.

Answer 1

You are also gambling on the interest rate. It could be 20% in 15 years, there is no way to predict that far ahead. I would only do this if you are going to sell in the next couple of years. Of course, you are also gambling on that, the house may be worth less then you owe making it impossible for you to easily sell it.

Answer 2

Yes, you should have a MAJOR concern with this! While you have intentions of refinancing prior to the balloon payment coming due, if anything happens to your credit between now and then you may find yourself in a position where you can't refinance. THAT would put you in a serious world of financial hurt!

I know that your intent is that your credit will remain strong but consider the unexpected such as the scenario that a family friend went through a number of years ago. He had just started a new job and he and his fiancee were celebrating their good fortune. They were walking across the street to where their car was parked, in the crosswalk with the green. An uninsured drunk driving piece of trailer trash ran them down. She died instantly and he was left a paraplegic and spent over a year in the hospital. He didn't have medical insurance yet as he hadn't been on the job long enough to qualify for it.

He lost his home to foreclosure since there was no income coming in. The medical bills were well into 7 figures and he had to file bankruptcy.

The trailer trash was penniless and the judgment against him nets a measly $20 a month when he can track down his employer and file the garnishment. The bastard then quits that job and moves on to another dead-end job and waits for the garnishment to kick in again.

Before the accident his earning potential was nudging 6 figures. He's working again on and off trying to get off of Social Security disability but the prospects are not good for a life anywhere near what he was previously on track for. Any hope of ever owning his own home again are pretty near zero as well.

Answer 3

idk