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Is there a penalty to refinancing a first and second mortgage into one loan?

I have a first and second mortgage, first one with 105k @ 6%, the second with 55k @ 9.5%, that I want to refinance into one. My home is worth around 350k. Can I combine these two mortgages into one with no penalty or is there a better way to do this? Thanks. by c.reil_717_612 from Billings, Minnesota. Jan 18th 2012 Reply


Steven Brand (stevenbrand)
#3 ranked lender in Minnesota - 95 contributions

William is correct... unless there's something FUNKY with the loans you have now. I agree with his advice on contacting a "local mortgage broker" instead of a bank. FYI... a "local correspondent lender" has very similar strengths in the ability to SHOP around for you unlike going to the bigger "institutional banks". If you are in MN.. and not MT.... drop me a line and I'll give you more advice.

Jan 18th 2012
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,620 contributions

There are no penalties for combining both loans into one new one from the NEW lender point of view. While doubtful, the EXISTING loans MIGHT have a penalty of some kind. Contact a LOCAL licensed Loan Officer, not a bank. Let them review a full application. They will discuss all your potential options. Visit us at www.Minneapolis-Mortgage.net

Jan 18th 2012
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Sherri Sherpy (SherriSherpy)
#9 ranked lender in Minnesota - 9 contributions

Not at all. There is never a penalty, however, certain characteristics do affect final interest rates. For example, credit scores, cash out financing and loan-to-value are a few of the factors that can increase an interest rate. As William explained, your loan-to-value is low. Now, providing you have good credit, I think you may find it quite advantageous to look further at refinancing.

Jan 18th 2012
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,144 contributions

Because your combined Loan to Value is below 60%, there should be no penalty at all.. contact a local mortgage broker, not a bank, and apply with them... they have access to numerous lenders and can find the right match for your particular scenario. WilliamAcres.com

Jan 18th 2012
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

You can consolidate both loans and get the BEST AVAIALBLE RATES as long as your new Loan to Value ratioo doesn not exceed 60%. Call me to review your options.Joe Shamie First Choice Bank 866-970-3400 x274 jshamie@fcbmtg.com

Jan 19th 2012
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Adam Webb (Adam.Webb)
#15 ranked lender in South Carolina - 19 contributions

No, based on your scenario there should be no hit for combining your first and second mortgage into one loan. The Key is the equity you have in the property as long as your home appraises for $275 or more you shouldn't have any problems or any penalty to combining them. It would be considered a cash out refi most likely but that won't matter as long as you stay at or below 60% loan to value. I hope you find this information helpful. Please contact me with any questions or concerns. I look forward to speaking with you shortly. Adam Webb, NMLS # 196458, Mortgage Consultant, First Charleston Mortgage, 1 (800) 968-3987 or adam.webb@firstcharleston.com

Jan 19th 2012
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,815 contributions

Based on the numbers you provided, refinancing and combining the two mortgages into one should be very easy and not very costly either. In fact, you may find that if you keep your new payment close to what they are now, you could significantly shorten the time needed to pay the loan off. My advice is to contact a local Mortgage Banker/Broker, rather than one of the big banks. Unlike a bank employee, who is most likely just an order taker, a Mortgage Broker/Banker is Trained, Tested and Licensed in all aspects of Mortgage Origination. He/She will have access to loan products of many lenders, not just those of one bank, and can properly guide you. But more importantly, He/She is trained to take a look at the various different options available to you and guide you into the one that makes the best sense for your situation. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com

Jan 19th 2012
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Conrad Ellestad (Conrad)
#17 ranked lender in Minnesota - 13 contributions

Based on your scenario there should be no hit and it would be best to combine the loans! Your total combined loans just need to come in under 80% loan to value. In your situation most likely even with closing cost you will be under 50% ($105k+$55k=$160k/ $350k = 46% Loan to Value). I am sure you will save a significant amount monthly. The interest rate you receive will depend on a varity of factors though such as credit score, debt to income, etc.

Jan 20th 2012
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