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by CareyBot

"My house is worth $400,000. The balance of my 5.5 percent first mortgage is $270,000, and I need $50,000 to pay off debts and make some improvements. I spoke to three mortgage brokers, and all advised me to refinance my first mortgage for about $325,000. I was thinking that I would just take a second mortgage for $50,000, but the brokers all rejected that idea. What am I missing here?" What you are missing is a realization that, in selecting between a cash-out refinance and a second mortgage, the broker's interest and yours may be in conflict. A mortgage broker might pocket a fee of $3,000 or more on a $325,000 cash-out refinance, but only $500 or even less on a $50,000 second mortgage. Borrowers who need cash should select the option that is least costly over the period they expect to b...