Should I refinance to put both mortgages together?
We currently have a first mortgage with a balance of $108,000, and a second mortgage with a balance of $42,000. The total that we pay for both per month including taxes and insurance is $1,336. The rate on the first is 6.5% and the second is 9%. Should we consider trying to refinance and put them together? Or just leave them alone?
Tags: both, Mortgages, Refinance, Should, together
I would try to refinance if you can get a better rate. 9% is huge, if you have decent credit you should have no trouble refinancing to a lower rate.
Important factors in making the decision……………
Will the new loan be at a lower intrest rate?
What will the charges be when you combine ?
Take the re finance charges and decide how long the lower intrest rate mortagage will take to recoup those cost’s and do you plan to stay in the house that long.
Let’s say the refi cost’s $1000 dollars…………..Lets say the new loan intrest will save $100 a manth. That will take 10 months before you start to see the benifit of doing this.
If you have squeaky clean credit you might be able to get a better rate.
Try a Credit Union?
Mortgage Companies are more expensive.
See what kind of rates they offer,… make sure you have a FIXED loan and not an ARM loan.
Don’t refinance with fly by night companies… make sure it is a reputable bank.
IF you credit is not so clean and with the banking the way it is, they may actually charge you a higher interest rate.
If you plan to sell your house in the future, I would keep them separate.
if you plan to live there for a long time, combining them will make it easier to pay and alittle cheaper.
I would say refinancing is a good idea at this time, as long as you will not have PMI payments, the mortgage officer will know what that means. Otherwise you can just refinance the 2 nd mortgage. Make sure that you credit is almost perfect and the new interest rate is really low and the closing costs are not to high. Good luck
You need to look at the expenses involved in the loan, and also how much the interest rate will be on the new loan.
If one is a fixed interest loan and the other is variable, sometimes it is better to leave them be.
You might not have enough equity in the current market to make refinancing an option.
You need to look at all the expenses, and how long it will take to pay off the loan, versus how long it will take to pay off both loans in your current situation.
If you can get a considerable reduction in the rate, and the fees are not too high, and you have enough equity in the properties to make it a safe proposition, then you should put them both together. It might cost you less in fees and charges to have only one loan, however if your mortgages are on two separate properties (your family home, and an investment property, for instance) you might make it harder to claim a tax break on the interest on the investment property, if negative gearing is allowed where you live.
Speak to an accountant, and give them all the information. They will be able to tell you what is the best option, given your circumstances.
Best wishes.