Refinancing your second mortgage can help you save money by reducing
your current high rates and caps. You can also consolidate your mortgages
for easier payments and better financing. Just be sure that you compare
financing offers first to be sure you are getting the best deal.
Lower Your Home Mortgage Interest Rate
The prime advantage to refinancing your second mortgage is that you can
lower rates. Second mortgages can be financed through an adjustable or
fixed rate. Adjustable rates work best for those who plan to move or
refinance in the future. Fixed rates are better suited to those who want
security, especially if you plan to keep your mortgage for several
years.
You can also lower your rates through a variety of terms. With
adjustable rate mortgages, changing your caps will affect your rates. So will
lengthening the locked in rate period for an ARM. You may also have the
option to pay points to lower rates.
Shopping financing will help you compare offers. Looking at the APR
will help you understand the total cost of the loan. But, if don’t plan on
keeping the mortgage for its entire life, then consider low fee with a
low initial interest offerings.
Opt For Better Mortgage Loan Terms
Better terms can also save you money by limiting your risk and speeding
your payment period. Shopping for reasonable caps on adjustable rates
will protect you from potentially large rate or payment hikes. You
should also look at fees that are a part of closing, early payment, or
payment delays.
Opting for a shorter mortgage can also save you money on interest
charges. Most lenders also offer better rates for shorter loans.
Consolidate First and Second Mortgages for Easy Payments
Consolidating your first and second mortgage can also benefit your
budget. Combining mortgages will usually help you lower rates on both types
of mortgages. You should still check out refinancing your home loans
separately, as you may see a greater savings that way.
Second mortgages are seen as a higher risk than having just one
mortgage. That’s why their rates are a couple of points higher than
conventional loans.
As with any money decision, no one solution will work for everyone. So
make sure you compare loan quotes with your own current mortgage terms.
Also, look at your long term housing plans to be sure you have enough
time to recoup any closing costs involved.
See my recommended
Home Mortgage Refinance Lenders for the lowest rates
online.
Carrie Reeder is the owner of ABC
Loan
Guide.
