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.
View our Recommended Refinance Lenders Online.
Carrie Reeder owns ABC Loan Guide, an online resource with information about Mortgage Brokers
Online and Bad Credit Mortgage lenders online.
