I think many banks are refusing to refi if the value of the property is less than what you owe. but it doesn’t hurt to ask.

the 2nd loan looks high in percentage amt but overall those 2 payments are very small.

what they need to do is get the value of the house. any Realtor can give them a value of properties sold in past few months comparable to theres in that area. so if you owe $175K but similar home sold for $140K, see the problem? have to check the value. they could also pay an appraisal.

It depends on too many things to be able to answer the question with the information provided.

What is the home worth?

What are their credit scores?

Are both loans from the purchase?

If the new loan would require private mortgage insurance, that would be a major factor. Currently, the blended rate is almost 7%. Market rates are in the low to mid 6’s, but you would have to add the PMI factor to the note rate to approximate the APR. Assuming you are still at close to 100% loan to value, the PMI would be .78-.96% or higher so refinancing now might actuall increase their cost of of borrowing and just cost them money.

Most lenders will not do a loan that has no benefit, but I am sure their are still a few who would try to convince you there is a benefit when there is none. Watch out for the ARMS if they currently have a fixed rate program. That might be the only way they could reduce the rate significantly without paying a bunch of points.

Another key factor is how long they plan to own the home. Will they actually save money? If it costs 3K to refi and they are only going to save $30/month, it would take 100 months to recoup the cost. That is, they would not really save any money for 8+ years. This is especially true if you were to discount the month savings to the net present value.

My gut tells me right now is not the time.

Good luck and watch out for those “sales” people. Look for someone locally you can trust and talk to them. Ask friends and neighbors if there is anyone they would recommend. Chances are they won’t recommend someone who is going to screw you over.

Good luck.

Correction: at that time they were snagged into these loans by someone who told them they COULD (not necessarily should) refinance now on better terms. Whether they actually do depends on whether they get another loan (fixed rate) at a better rate. people refi to save money and/or to pay off the loan faster by going with 15 or 20 years instead of 30. They’re adults and should be able to handle this.

They could refinance and get it reduced to one payment and possibly a lower interest rate depending on their credit score

you did not volunteer what equity, if any exists. IF none, there is
no purpose served re-financing. If there is, it might be practical
to pay $1,000 in points to get a new fixed at 5%.

The house has probably dropped in value and they probably can’t refinance. Moreover, very few banks are offering refinancing these days.