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Is it more sensible to combine my first mortgage with Second or leave the second alone ?

I have 1st mortgage of $170K 5/1 ARM 4.25% due for refi in 2 month. I also have a home equity 2nd loan of 55k for 5 yr @3.9%. I have 4 year left on this loan. Should I combine the two and then refi or just refi the first one  ? My dilemma is that I have a great rate on 2nd. Also if I combine the two and get a 15 yr 4.5%, I will be stuck with paying $1818 for the next 15years. With two growing kids,11 and 7 and a possible fall in income going forward with the economic uncertainity, what is best ? 
If I just refi the first and pay off my second in next 4years I will have more money to afford my kids expenses. If I combine the two I can own my home free and clear in next 15 yr. help !!! 
  • April 01 2009 - Greer
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Answers (5)

Good for you! ... Wise choice! .... Best wishes, Rudi
  • May 29 2009
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Profile picture for titanic98
I did what Chip Streater has suggested.
I combined my first with the second and did refi @4.75% for 30 years.
That way my monthly payments have dropped. Even if my income drops for whatever reason in my mind i will be better positioned to stay in my house.
It was difficult to pass up the INGdirect rate renew of 3% on my ARM but it was just for 1 year so I let it go.
Thanks everyone for your inputs.
  • May 29 2009
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Profile picture for titanic98

my second loan of 3.95% is with a great credit union and they have agreed to subordinate it free of charge.
i have a $900 payment on first and $1100 on second. So combined it is $2000. If i refi both to a 15yr one I get a $1818 pmt. But then the thought of continuing to pay this for the next 15yrs is a little scary v/s paying the $2000 for next 4 yrs more and then the 55k loan is paid off and all I am left with is a $900/ pmt on my house.
What would you do ?

  • April 01 2009
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Just make sure you choose an option you can afford going forward.  Don't stretch your budget too far based on a 15 year goal and put yourself in a tough spot now.

Have you gotten your lender of the 2nd to confirm they will subordinate to the new refi of the 1st alone?  If not, you may be forced to refi both.
  • April 01 2009
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Profile picture for ROBOT5
That is a hard question...job certainty? kids college plans in 7 years? Value of current home?  FHA are great for combining and getting some extra cash off top, however the premiums suck. Dunno man sorry the obvious is the refinance of the first, however the second 55k looks pretty sweet as it is.
  • April 01 2009
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