Whether it's your first of second mortgage, refinancing requires a lot of thought. Though it varies with your amount of equity, the combination of two mortgages might carry a higher interest rate. Also, you may have to carry PMI with your refinanced mortgage.
Will You Gain From Refinancing?
If you've got two mortgages refinancing rolls the loans into a single bill, which usually decreases your monthly payment. If conditions are right, you could also get lower interest rates. The more equity you have in your home, the more you stand to gain from refinancing them together. With more equity, you are eligible for lower interest rates. Interest savings as well as monthly payments should figure into your calculations. If you've got under 25% equity, you'll get higher rates. Homeowners with under 20% equity need to pay for private mortgage insurance. But even with these extra costs, refinancing might still be an economical choice.
Have You Researched Online?
f you want to know whether refinancing is a smart move for you, start researching lenders. The Internet makes it fast and easy to get quotes. After comparing various offers, you can do the math. Online mortgage calculators help you to devise monthly payments and interest. The best way to evaluate costs is to add up the interest payments for both of your mortgages and then compare that number with the interest payment on each prospective mortgage. Remember that refinancing includes costs too. You'll have fees and points to pay with refinancing, as you did with your initial mortgage. Make sure to factor these costs into your calculations to see if you still save.
What is your Motivation for the Double Refinance?
Refinancing both mortgages into one payment certainly simplifies things, but it's not your only option. You can also refinance one mortgages alone, or both separately. The main mortgage usually qualifies for low rates. It's likely that your second mortgage will qualify for higher rates, but they can be locked in. Another option is to switch from a line of credit to a real mortgage. Just thoroughly check out all packages before doing business with any lending institution.
