Hoosier Homes Guide
Can I Refinance the First Mortgage Later Without Paying Back the Second Loan?
Refinancing your first mortgage before the 7-year forgiveness period ends will trigger repayment of the remaining Hoosier Homes balance.
Refinancing your first mortgage before the 7-year forgiveness period ends will trigger repayment of the remaining Hoosier Homes balance.
If you refinance your first mortgage before the Hoosier Homes second mortgage is fully forgiven (7 years), the remaining unforgiven balance becomes due.
This is standard for subordinate second liens: the second mortgage must be paid off or subordinated when the first mortgage is refinanced. Because Hoosier Homes is forgiven incrementally (1/84th per month), only the unforgiven portion would be owed.
After 7 years of continuous primary residence occupancy, the second mortgage is fully forgiven and there is nothing to repay — refinancing at that point has no Hoosier Homes implications.
If you are considering a refinance, talk to your lender about the current unforgiven balance and how it affects your refinance numbers.
If you refinance your first mortgage before the Hoosier Homes second mortgage is fully forgiven (7 years), the remaining unforgiven balance becomes due.
This is standard for subordinate second liens: the second mortgage must be paid off or subordinated when the first mortgage is refinanced. Because Hoosier Homes is forgiven incrementally (1/84th per month), only the unforgiven portion would be owed.
After 7 years of continuous primary residence occupancy, the second mortgage is fully forgiven and there is nothing to repay — refinancing at that point has no Hoosier Homes implications.
If you are considering a refinance, talk to your lender about the current unforgiven balance and how it affects your refinance numbers.