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1st and 2nd Mortgage Refinance Loan – Why Refinance Both Mortgages?

April 23rd, 2010



The hassle of making two monthly mortgage payments has prompted many homeowners to consider refinancing their 1st and 2nd mortgages into one loan. While combining both loans into one mortgage is convenient, and may save you money, homeowners should carefully weigh the risks and advantages before choosing to refinance their mortgages.

Benefits Associated with Combining 1st and 2nd Mortgages

Aside from consolidating your mortgages and making one monthly payment, a mortgage consolidation may lower your monthly payments to mortgage lenders. If you acquired your 1st or 2nd mortgage before home loan rates began to decline, you are likely paying an interest rate that is at least two points above current market rates. If so, a refinancing will greatly benefit you. By refinancing both mortgages with a low interest rate, you may save hundreds on your monthly mortgage payment.

Furthermore, if you accepted a 1st and 2nd mortgage with an adjustable mortgage rate, refinancing both loans at a fixed rate may benefit you in the long run. Even if your current rates are low, these rates are not guaranteed to remain low. As market trends fluctuated, your adjustable rate mortgages are free to rise. Higher mortgage rates will cause your mortgage payment to climb considerably. Refinancing both mortgages with a fixed rate will ensure that your mortgage remains predictable.

Disadvantages to Refinancing 1st and 2nd Mortgage

Before choosing to refinance your mortgages, it is imperative to consider the drawbacks of combining both mortgages. To begin, refinancing a mortgage involves the same procedures as applying for the initial mortgage. Thus, you are required to pay closing costs and fees. In this case, refinancing is best for those who plan to live in their homes for a long time.

If your credit score has dropped considerably within recent years, lenders may not approve you for a low rate refinancing. By refinancing and consolidating both mortgages, be prepared to pay a higher interest rate. Before accepting an offer, carefully compare the savings.

Moreover, refinancing your two mortgages may result in you paying private mortgage insurance (PMI). PMI is required for home loans with less than 20% equity. To avoid paying private mortgage insurance, homeowners may consider refinancing both mortgages separately, as opposed to consolidating both mortgage loans.

By: Carrie Reeder

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2009 Obama Stimulus Plan For Mortgage Refinancing and Home Loan Modification

March 28th, 2010



Homeowners who are having a hard time paying their monthly mortgage payment, are facing “Financial Hardships”, are facing foreclosure, or want to save money every month should take advantage of President Obamas “Making Home Affordable” plan. This recently enacted plan allows homeowners to get 2% fixed rate home mortgages through refinancing or loan modification. Here is how you can take advantage:

To take advantage of President Obamas plan for yourself, you must meet these guidelines and eligibility requirements:

-Homeowners who are facing financial hardships, and can prove them with documents, can apply for, and most likely be approved for a home loan modification. This will be into a much more affordable monthly payment, depending on your financial hardships and how much those cost you.

-The home which is to be refinanced using this “Making Home Affordable” plan needs to be lived in as a primary residence by the actual homeowner. Homes used as investment, or second properties are not covered under this Government backed housing bailout program.

-With such a bad housing market and economy, homeowners can now refinance or get a home loan modification even if they owe as much as 105% of their homes actual market value. This will assist a lot of homeowners who have been making their payments, yet have seen their home values drop as a result of the tough economy.

-Home loans backed by either Freddie Mac or Fannie Mae are automatically eligible to be modified into a monthly payment which will not exceed 31% of the homeowners gross monthly income. This will help a lot of people who currently spend 50% or more of their income towards their mortgage payments.

This is a great way for millions of homeowners across the country to get back on track with their finances, save money every month, or most importantly save their home from foreclosure. Refinancing and loan modification are now easier and more beneficial for a homeowner than they have ever been before. If you need to save money to save your home, or pay off other mounting debts, use this plan now and start seeing the huge savings every month. You at least should look into the potential savings that you may be able to get by talking to a mortgage lender or bank. Do yourself a favor and act now before it is too late and you lose your home, or this program is gone.

By: Michael Petrone

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Refinance Loan Financial Solutions

February 28th, 2010



Before finalizing on any particular Refinance loan it is important to have a clear financial objective in mind. This means that you have to learn about everything from when you should refinance to how you can increase the value of your home. All these things will make you more aware and confident to choose the most appropriate loan. Ultimately, the decision is up to you to decide which the best refinance loan option for you.

There are multiple ways with which you can opt for your refinance loan. These are -

Adjustable Rate Mortgage (ARM) to a fixed rate Mortgage

This means that if you have an adjustable rate mortgage (ARM), it may adjust to a rate that is higher than a fixed-rate mortgage. If the situation is unsuitable then it might be an excellent time to consider refinancing to a fixed-rate loan.

It is essential for everyone that before taking any refinance loan to consider the amount of time he or she plans on being in his or her home. If one is just going to be in the said home for a few more years, it may make sense not to refinance out of your ARM. If one is going to stay in there for a long period of time (at least seven years), then it might be a smart move to refinance to a fixed-rate mortgage.

Fixed Rate Mortgage to an ARM

You have to first decide how long you plan on being in your home. Many people move within nine years so it becomes meaningless to pay a higher interest rate for a 30-year fixed-rate mortgage because you’re not going to stay in the home that long. Doing so may be costing you more money than you can afford. Consider refinancing to an ARM instead – you’ll get a lower rate and lower your monthly mortgage payment.

Easy ways to reduce your monthly payment with a refinance loan -

-You can simply refinance to a lower interest rate. A lower rate generally means a lower monthly payment.

- By changing the term of your mortgage you can reduce your monthly payment. For example, if you take a 20-year mortgage, you can lengthen the term to 40 years.

- Although, if you have a 40-year mortgage and one of your financial goals is long-term savings, you may want to consider shortening your term to 25 or even 20 years. Your payment will be higher, but you will pay much less in interest over the life of the loan, saving you thousands of dollars in the long run.

- You can always refinance to an interest-only loan.

For most people who want to save or reduce monthly payments there is also the option of interest only loan. This kind of refinance loan is very popular, easy to manage and useful. An interest-only loan gives you the option of paying just the interest and as much principal as you want in any given month.

Refinancing to an interest-only loan is a good choice for anyone looking to make his or her money work harder for him or her. Here one can get the opportunity to use the money saved from the refinance loan for another purpose.

-One can pay down high-interest credit card debt

-Save it for your children’s college tuition.

-You can buy a car for your family.

-Use it for your home improvement

By: Martin Lukac

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