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Consolidating 2 Mortages

I have 2 mortgages.
1st mortgage: 292,331 @ 5.5% (30 year, est $2,117 monthly)
2nd mortgage: 33,625 @ 7.25%. ($575 monthly)
What will be some pros and cons of consolidate both into a single lower monthly payment at today's rate?
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November 01 2010 - Quincy
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Your total outstanding balance with both the loans together = $325,956. If the current loan balance is less than 80% of the current value, then it would make total financial sense to consolidate and get a lower 30yrs fixed rate in mid 4% range depending on the other factors such as fico and propety type. However for this transaction to be rate and term the 1st and 2nd mortgages have to be purchase money 1st and 2nd. If you have drawn on the 2nd after purchasing the home then you will be capped at 75% of the value of the home as it is then considered a cash out transaction.

Either way, you should be able to save money with the consolidation as your current rates are much higer

If however there is not enough equity in the home to have the 80% LTV, then you should subordinate the 2nd and still refinance the 1st mtg and you will still save money.

PS: this is only for owner occupied properties

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November 01 2010
With rates that high it would absolutely be worth looking into

I can not think of any cons to refinancing into a lower rate/payment unless you are payng closing costs and plan on selling your house in the next year or so.  In that case you would need to calculate the savings vs cost to refi and figure out how long it takes to recoup those costs.  You wouldn't refi if it didnt add up

Of course the big challenge in refinancing these days is the value of your home vs the balance on the 2 loans.
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November 01 2010
The only way there can be a con depends on how long you've had each mortgage abd what type of loan you're interested in. For example, if you've had your first mortgage for 8 years and now you want to change it to a 30 year loan, it may not make sense.  A 20 year loan would be  amuch better cchoice.  There's a very simple way to calculate this.  Please let us know how long you've had each loan, the terms of each loan, your home's value and what type of loan you're interested in.  Thanks.
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November 01 2010
 
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Consolidating 2 Mortages
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Latest reply by Eddie Luhrassebi
November 01 2010 | 3 answers
  • Posted by GQuincyMa
  • In Refinance
  • November 01 2010
Mortgage Rates
 
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