Wednesday, January 02, 2008

Refinancing First and Second Mortgage into a Single Loan

If you have got got a home loan, perhaps you have considered refinancing your
loan. Homeowners may refinance their home loan to cash-out and pay
outstanding credit card balances and consumer loans. In addition,
refinancing a home loan is ideal if you have got two mortgages. Combining a first and
second mortgage into a new loan is a great manner to consolidate debt.

Why Get a Second Home Mortgage?

Many homeowners obtain a second mortgage. The grounds vary. Some may
get a second mortgage to eliminate credit card debt, whereas others may
borrow money to finish home improvements. If you get a second
mortgage, the finances are secured by your home’s equity. In addition, a second
mortgage is a separate loan amount. Because these loan amounts are
smaller, the monthly payments are lower than first mortgages. However, the
interest rates on second mortgages be given to be higher.

Nevertheless, the interest rates on second mortgages are considerably
less than credit cards. Plus, the loan terms are fixed, which allows you
to pay the balance within a few years. If you are hoping to eliminate
debt, and simplify your finances, consolidating your first and second
mortgage is the perfect solution.

Mortgage Loan Refinancing

Refinancing your first and second mortgage into a single loan is ideal
if you have got a higher interest rate on both loans. For example,
homeowners with less than perfect credit may have an initial home loan with
a higher percentage. Moreover, their second mortgage may also carry a
higher interest rate. If you are in this situation, seek and better your
credit rating, and then apply for a new mortgage. This way, you
increase your opportunities of being able to consolidate your first and second
mortgage at a lower fixed rate.

In some instances, homeowners obtain a first and second mortgage with
an adjustable rate. This is good in the beginning because the
rates are low. However, as market tendencies shift, the interest rate on both
loans may increase, which will increase the monthly payments. This is
dangerous. If a homeowner is not able to pay either mortgage, the lender
may foreclose. Thus, it is wise to refinance both mortgages into a single
loan before interest rates increase.


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