Combining two mortgages into one can be an attractive option for the homeowners. Many property owners have taken advantage by opting to get a second mortgage by taking the home equity lines of credit. The second mortgage help homeowners to pay for the big expenses like home renovations, educational costs, or purchasing a second home.
The interest rate on combining two mortgages into one can be an attractive option for the homeowners is normally low than the first mortgage. However, qualifying for the second mortgage depends on your credit history. No lender would want to take any risk when lending out the money. If you plan to combine two mortgages ensure that your credit history is up to the mark. Keep few things in mind when merging two loans.
Consolidation of two mortgages
Before starting out the process, make sure you do some homework. Your first loan is the loan you borrowed to purchase your home, whereas, your second loan is to pull out the cash for your other financing. The merging of two loans may add your cost and reduce the amount of the new loan. Another thing is refinancing your loan – this would adjust your interest rate on your current loan. Lenders consider this as the safest option because they would not be lending any extra money.
The consolidation process may be hectic, as it would involve lots of paperwork. The first step is to get in touch with two to three lenders who can offer you some best deals. The process starts with examining your first and second loan. Lenders will give you different options like waiving off closing costs depending on how long you have been associated with the bank. Remember, the paperwork is more lengthy and technical as compared to the single mortgage.
Find the lender who gives you best loan rates. Refinancing your loans may cost you some money. The best thing to do is get quotes from different lenders. Many lenders would visit your property and assess the value of the house to determine the equity. They want to ensure that equity is higher as compared to the two loans.
Once you have found the lender you want to work with, he or she will walk you through the process. However, make sure to read all the papers before signing.
Is it beneficial?
Combing two mortgages may be beneficial for some homeowners. It is always a good idea to check with your lenders.
The above-mentioned points were the benefits when you should consolidate the two mortgages:
Never make a decision of loan consolidation based on lower monthly payments. Everyone situation is different; some people may have to pay newloan longer than they would do with their original mortgages. Always compare your current mortgage with the new one and see which one would end up saving you more dollars.