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. So
even if you choose the same length for your loan, you will still
see a savings in your monthly mortgage bill. Adjustable rate and
interest only loans will give you the lowest payments, at least
at the beginning of your home loan. But a fixed rate loan can
also give you reasonable rates with security that they won't
rise in the future.
The other option is to extend your loan term, especially in the
case of your second mortgage which usually is for five to ten
years. By consolidating your loans to a thirty year loan, 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 Loan
Once you determine the type of loan and terms you want, do your
shopping 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 loan quote based on your general information.
With more accurate numbers, you can make an informed choice as
to who has the best financing for you.
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