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Consolidate your First and Second Mortgage

04.16.20 10:21 AM Comment(s) By Brad Plummer

Refinancing both your first and second mortgages will result in one low monthly payment that could save you thousands in interest charges. By combining both mortgages, you qualify for lower rates than if you refinance separately. You can see a significant savings with your second mortgage refinance, which is often several points higher than your first mortgage rates. You will also save on application fees and other closing costs.

Strategies To Lower Your Mortgage Payment


You have a couple of options to lower your mortgage payment when refinancing. The first choice is to find a low rate mortgage.  Adjustable rate or variable rate mortgages and interest only loans will give you the lowest payments. But a fixed rate mortgage can also give you reasonable rates with security that they won’t rise in the future.


The other option is to extend your amortization back out to 30 years. By consolidating your mortgage to a thirty year amortization, you lengthen your payment schedule for principal, so you have a smaller payment. However, your interest rate and charges will be higher than with a shorter term.


Getting The Best Mortgage


Consult a mortgage broker to help you decide what is the best option for you. Once you determine the type of mortgage and terms you want, your broker will shop for a good lender to save even more money. Lenders will vary in how much they charge for closing costs and interest rates. The APR will tell you how loans compare overall, both in terms of rates and closing costs.


But if you are planning to move or refinance again in the future, then be wary of paying high closing costs. Even if they secure you a lower rate, you will only see a savings if you keep the mortgage for several years.


Don’t base your lender decision based on posted loan rates. Ask for a personalized quote based on your situation. With more accurate numbers, you can make an informed choice as to who has the best financing for you.
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