I bought a house on March 1st 2006. First off the house was listed for $211,000 but appraisals kept coming in low at $203,000 becuase the neighborhood is brand new and there were no comparables within a certain distance(VA appraiser) Anyway he wouldn't drop the price and someone else had already offered $209,000. Well I said heck with it and bought it. I had to actually get a quiet second to close the deal (so this was already kinda bad) Although the quiet second has no interest just needs to be paid off in 20 years. So that's not really a problem it just sits there. My question is I have about $1000 a month in vehicle and credit card payments with total debt of $45,000. My APR are threw the roof at 18.99 and 29.99. The 19,000 vehicle loan is pretty good at 5.5. What I want to know is if it's a good idea to get a 125% loan and get $48,000 at 13.5% for 25 years? This would give me a payment of $559 a month. Now you probably think I'm crazy, but I can pay about $1,800 a month to this. It just seems as though the finance charges are keeping me from touching the principle on the cards. So this way having only a $559 payment, then $1200 will go straight to the principle. Is this a good idea? I never plan on selling my home and will rent it out when I leave. Thanks!

Are you sure your second mortgage has no interest? Where did you find someone willing to depart with thousands of dollars just out of the kindness of their heart? Check on that. If you refinance and then find out in two years that your second mortgage payment is about to double, you will be in trouble.
Also, financial advisors tell you never to put debts on your house that do not directly improve the house itself.
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It was my builder. It is quiet second that does have no interest. It's about $8000 and I just have to pay it off by 2026, I don't even make payments to it. It really just sits there until I pay it in full by 2026 or if I sell the house I have to pay it off too. Yes weird, but the builder wanted to get his price over the $203,000 appraisal so I had VA loan and that's the only way I would take the deal at $211,000.

Ahhh, I understand. Interesting.
Well, you're asking a personal financial question on a real estate board, so take ALL opinions as just that, opinions and not "expert" advice.
My advice, call all of your creditors and negotiate your interest rates with them. They are charging different interest rates to ALL of their consumers, believe me. Become one of the consumers who is charged 12% (or less if you can get it there.)
And then, pay on your credit cards EVERY TWO WEEKS. Even if it is just exactly 50% of what you normally pay, just send the check EVERY TWO WEEKS.

Another source I can recommend is trimyourdebt.com.

But I absolutely would not attempt to owe anywhere near 100% on your home in today's world, absolutely not. I understand you never plan to sell it. I still say don't max yourself out like that. Chip away at the credit cards in another way.
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I would also recomend talking with who ever is doing your taxes. There may be tax emplications and in the long run it may not be to your advantange. Only you CPA would know for sure.

Vonoventwin, you have asked an excellent question. First of all I would agree that putting yourself upside down on your home is scary, and not something I normally recommend. However you closed on your home already upside down by $8,000. So we can approach this simply form a savings standpoint, and I hope that you are in some sort of fixed interest mortgage program on your 1st mortgage.

I put together an amortization schedule based on the loan terms you listed $48K loan @13.5% with you paying $1,800 a month. It is the link below:

http://www.mortgage-calc.com/mortgage/loan.php

I am a mortgage broker and have been one for about 6 years with 5 more years in finance. I am by no means an expert, but if you really tie yourself to $1,800 a month payment you will be paid off in 2.7 Years. Also the interest you pay is tax deductible on the mortgage depending on your tax situation consult your CPA to verify. If you take 2.7 years x 12 months= 32.4 months x $1800= $58,320 - 48,000= $10,320 extra it will cost you to pay off your debts going this route.

The second mortgage/ lien will have to be paid off with your new mortgage. Will the $8,000 kill your deal?

I lend in Tennessee hence my screen name, but we are only allowed to go to 115% LTV here. I have never sold this loan option to a customer or even presented it as an option. I do not know your entire situation, but it does seem like an option that may actually provide some benefit for you.

So now the thing to do is determine how long $1,800 a month against all of your current debt minus the tax deduction will take to pay off. How much extra is that goign to cost you?

Here are some great calculators to help you figure this out:

http://www.mortgage-calc.com/index.html

http://www.drcalculator.com/