If you refinance both your first and second mortgages, you'll have just one low monthly payment and could save a lot of money on interest. By putting both mortgages into one, you can get better rates than if you refinance each one separately. When you refinance your second mortgage, which usually has rates that are a few points higher than your first mortgage, you can save a lot of money. You will also save money on application fees and other costs related to closing.
Ways to cut down on your mortgage payment
When you refinance, you have a few ways to lower your mortgage payment. The first option is to find a mortgage with a low interest rate. Even if you keep the same loan length, you will still save on your monthly mortgage payment. Adjustable rate and interest-only loans will give you the lowest payments, at least at the beginning of your loan. But with a fixed-rate loan, you can get good rates and know that they won't go up in the future.
The other choice is to extend the length of your loan, especially if you have a second mortgage, which is usually for 5–10 years. By putting all of your loans into one 30-year loan, you can spread out your payments for the principal over a longer period of time and pay less each month. But your interest rate and fees will be higher than if you took out a loan for a shorter time.
How to Choose the Best Loan
Once you know what kind of loan and terms you want, you can save even more money by shopping around for a good lender. Different lenders will charge different amounts for closing costs and interest rates. The APR will show you how rates and closing costs compare across all loans.
But if you are planning to move or refinance again in the future, then be wary of paying high closing costs. Even if they get you a lower rate, you won't save money on the mortgage until you keep it for a few years.
Don't choose a lender based on the loan rates they list. Ask for a personalised loan quote based on the information you have given about yourself. With more accurate numbers, you can choose the best lender for you based on what you know.
