I want to refinance but the equity is only 10%. Is there better option to avoid 2nd mortgage.
You do have other options in front of you, assuming you qualify, that will allow to to accomplish refinancing without taking out a second mortgage.
FHA and Agency programs will allow a 90% loan to value however you should be aware that mortgage insurance will probably be required.
Another option would be to look into LPMI or lender paid mortgage insurance. This solution will mean a slightly higher rate than the FHA and agency counterparts, but will not require private mortgage insurance and could have a lower monthly payment. With that said LPMI can only be removed by refinancing again while you can petition to have private mortgage insurance removed onve you have a larger equity position.
With that said there are new guidelines rolling out that will permit someone to refinance over 80% LTV (and in some instances over 100% LTV without mortgage insurance. Whether or not you qualify will depend on your original financing (that is the loan you are refinancing). Rates for this program will be competitive with the current market. The details and how this will work are still being fine tuned, however it is set to release April 4, 2009, and if you qualify will without question be the best option for you.
I suggest waiting a week or so for this new program to become available before finalizing the refinancing option you movfe forward with.
I recommend working with a broker to ensure you have every option in front of you.