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What is the benefit for refinancing a second mortgage?

I have a first and second mortgage. My first mortgage is financed at 5% and my second is at 9%.. I am considering financing both mortgages with a 2.75 rate and a 15 fixed term. The goal is to pay off the loan in 10 years by applying additional principal. My first thought was to only refinance the first at 2.75 and keep the second and pay the second off by applying additional principal and pay it off in three years. However, I was advised that it would be more beneficial if i roll both mortgages together. By doing this, I would benefit with more being applied against the principal. As my debt decrease, my principal will increase which will eventually be the goal to make one month's payment which will be principal only. . Any suggestions? by integritymbs112 from Ashburn, Virginia. 15 days ago Reply


James Schneider (JamesSchneider)
#102 ranked lender in Maryland - 30 contributions

Good Morning!The goal is to devise a strategy that will help you maintain and eliminate the debts as quickly as possible, while not hurting your monthly budget.First, if you did not use both mortgages to purchase the home and if it's a HELOC haven't drawn on it, then your refinance goes from being a rate and term refinance to a cash-out refinance in which the rate would see a jump from the quoted 2.75%. The rate would still be astronomically low and could fit into what you are alright paying a month.You can always go with your first thought and pay off the first quickly and then starting paying off the second, but you may want to look at the terms of the second loan to make sure it isn't more beneficial to wrap it all into one loan.Finally, whomever you are working with will need to make sure that the goals that you are looking for are being met. Refinancing is a big transaction as you are talking about hundreds of thousands of dollars. Make sure that all costs are being presented, that they are giving financial and prudent advise, and mostly making sure that when they follow up in six months to review your mortgage that you are still comfortable with your payment. All the best in your refinance transaction!James SchneiderEagle Creek Mortgage

15 days ago
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Great Question!Combining the two loans will save you the most money - primarily because the rates you have now are so high in comparison.A 15 year mortgage has a payment that is 30-40% higher than a 30 year mortgage but as you clearly understand, it will pay off much faster. Given the rates you have now, I'd bet the new 15 year loan will even have a lower payment than what you're paying now.The best way to fully understand the costs, payment, and impact on your finances is to have a detailed chat with a mortgage pro. That will allow a full analysis of the figures and let us lay out your options for you.I'd love to help. Just reach out and we can go through this today for you in 15 minutes or so.-Roland VarblowPresident Archwood Mortgage, LLCReston, VA(703) 765-2638

15 days ago
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