Refinancing your first and second mortgages will result in a low monthly payment that can provide you thousands of interest. By combining mortgages, you qualify for a lower rate than if you refinance separately.
You can see significant savings by refinancing your second mortgage, which is often a few points higher than the rate of your first mortgage. You’ll also save on application fees and other closing costs.
Strategies to Lower Your Mortgage Payments
You have several options for lowering your mortgage payments when you refinance. The first option is to find a low-rate mortgage. So even if you choose the same loan term, you will still see savings on your monthly mortgage bill.
A loan at an adjustable rate and interest rate will give you the lowest repayments, at least at the beginning of your home loan. But fixed-rate loans can also provide you with reasonable interest rates while ensuring that they do not arise in the future.
Another option is to extend the term of your loan, especially in the case of your second mortgage which is usually for five to ten years. By consolidating your loans into a thirty-year loan, you are extending the repayment schedule for the principal amount, so you have smaller payments. However, your interest rate and fees will be higher compared to the shorter term.
Get the best loan
Once you decide the type of loan and the terms you want, shop for a good lender to save more money. Lenders will vary in how much they charge for closing fees and interest rates. The APR will tell you how the total loan compares, in terms of rates and closing costs.
But if you plan to relocate or refinance in the future, beware of high closing costs. Even if they give you a lower rate, you won’t see savings unless you hold the mortgage for a few years.
Do not base your lender’s decision on the posted loan interest rates. Request personal loan offers based on your general information. By using more accurate numbers, you can make informed decisions about who has the best financing for you.