Refinance Mortgage

I know the market is not good for selling, but I am trying to get rid of my second mortgage, which is not too big, and get a better home at the same time.
I mean I am intending on selling my home. I won’t buy another home and continue to live in my own; I’d sell and then buy one.

If you are selling your current residence prior to closing on the purchase of the new home, both of your mortgages will have to be paid in full in order for you to convey clear and marketable title to your buyer.

The problem you will probably run in to is trying to get a bank to accept a contingent offer (that is, contingent on the sale of your current residence). What you may consider as a fall back is whether or not you could rent your current residence to cover your mortgage payments if you had to. Of course, you may prefer to sell it outright, but coordinating the sale and the purchase may be difficult unless you find your buyer first and have an open ended closing date which will allow you time to find a foreclosure you want to buy and get it under contract (good luck finding such a patient buyer).

Good luck with your sale and purchase!

My second mortgage is $150k. I understand that one can only deduct the interest paid on the first $100k. Is this correct, and if so, would it be reasonable for me to just leave off 1/3 of the interest, when making the deduction (for last year I made interest only payments)?

Check out publication 936 at the link below. Click the link for Part II, Limits on Home Mortgage Interest Deductions.

You have to scroll a bit, but there’s a table that will tell you how to figure that interest. It’s Table 1.

I am going to bid on a house at foreclosure and it has a 1st mortgage of $280K and a second of $70K. The lender on the first two mortgages is Decision One Mortgage. The lender at foreclosure is Countrywide. Does this mean that if I buy this house at foreclosure that I will own additional money to the second mortgage or just the first mortgage and back taxes?

When a senior lien forecloses, a junior lien is wiped out.

So if the first mortgage holder forecloses, the second trust deed goes away. If the second forecloses, you’ll still owe the first.

Oftentimes, if a senior lien forecloses, the junior lien holder will send a representative to the auction to defend its interests by making sure the property goes for enough to pay the junior lien as well. Or they buy it themselves with the idea of reselling. Costs money, yes. But better than losing their whole investment.