Want to consolidate my mortgage

Guest 0.10 Dollars($)

Right now I own 2 homes and have 2 mortgage payments. I need to pay around $880 on the primary mortgage and $1100 on the second home. On primary residence I owe about $57000 and on second home $103,000. My interest rate for both the mortgage is 5.8%. Please note that my primary home is in California and second home at Newyork.

I am thinking of consolidating the mortgages into one is it ok? Or do I get a home equity loan and pay off the primary mortgage?

Caron · Posted: Fri Oct 14, 2005 4:12 am Post subject: RE:

Hi Darren,

You can go for either option depending upon the payments that you can afford. Most people in your situation consolidate their mortgages just to reduce their monthly payments. They consider refinancing the existing mortgage debt with another loan.

But this is useful only when the market rates are low enough to reduce your payments. What you can do is to refinance with a 30 year fixed rate mortgage in case the mortgage rates are favorable. But this will depend on other terms and conditions of the mortgage which you haven't mentioned. But let me tell you that while you refinance, you will have to pay for the interest on the loan amount.

The other option to choose from is taking a home equity loan or a home equity line of credit and paying off the primary mortgage. This can be a better choice in the sense that it allows you to pay low closing costs. But out of these two options, I would prefer the first since the rates on a home equity line of credit keep increasing every time the Federal Reserve Board raises its interest rate target for Federal Funds. On the other hand, the home equity loans mostly offer fixed rate and hence fixed monthly payments.

Hope we have been able to guide you.

Regards,
Caron.

Guest 0.10 Dollars($)

Hi,

Thanks Caron for providing such useful information. This is a great forum.

Regards,
Darren

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