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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

Hi,

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

Regards,
Darren

Guest

I have two motgages both 30 year fix, first is $405K second is 83K on the same house i'd like to consoildate the mortgages to get a lower rate. What would surgest i do? one is 5.99% smaller loan is for 9% Confused

adonis · Posted: Mon Jan 19, 2009 10:47 pm Post subject:

Welcome Tish,

You can contact your lender and look for a refinance. Your lender will inform you about the rates and terms which you can get. If you cannot afford them, you can also contact other lenders and try to refinance with them.

You can even speak to the lenders of this community and seek a no obligation free mortgage consultation from them. This will help you to know the rates and terms that you might expect to get.

jveenstra · Posted: Tue Jan 20, 2009 12:01 pm Post subject: Consolidate Mortgages

If you pay $880 in principal and interest on the primary and the balance is presently about $57,000 and it is a 30 year fixed rate mortgage, the balance must have started at about $148,000 and that means you have had the mortgage quite a while.
Similarly, on the New York property, the original mortgage balance must have been about $186,000 if rate is 5.8% and balance now is $103,000 and your monthly P & I payment is $1,100.
If you consolidate two mortgages of $57,000 and $103,000 you probabaly need an appraised value on the Califonia property of about $215,000 to cover the mortgage pay offs and closing costs and be below 80% of the value of the property.
I say on the California property because you do not really want to refinace the New York property. New York has a mortgage tax and that is costly. It can be processed to avoid the tax on the $103,000 part, but, you would still have to pay the tax on the cash out part. New York mortgages are costly, so, if you do consolidate, do the new mortgage on the California property.
If you have a new 30 year fixed mortgage of about $170,000 at 5.50% the monthly P & I will be $965 which is $1,015 less than the $1,980 you pay now.
A rate of 5.375% would be $951.95. So every .125% drop in rate would be a lower payment of $13 a month.

If you look at a 15 year fixed at 5%, the monthly payment would be $1,344, still $635 less than you now pay and you do not start 30 years all over again.

gmakerley · Posted: Tue Jan 20, 2009 12:55 pm Post subject:

john, i've done this myself in the past, but you'll be aghast when you go back and look at the date on the post to which you replied.

it was written in october of 2005. presumably the poster's issues have been resolved by now, one way or the other.

laugh it off...it's too easy to do to not pay attention to the original date and then go ahead and respond to it.

Guest

I am aghast.

gmakerley · Posted: Tue Jan 20, 2009 12:59 pm Post subject:

excellent post!

eric1 · Posted: Thu Jan 22, 2009 6:32 pm Post subject:

Alot of effor put into writing that post. Unfortunately the person who it was directed towards will probably never get to read it. Sad

gmakerley · Posted: Sat Jan 24, 2009 7:16 am Post subject:

but of course, eric, we never know (in most cases) just how fruitful our posts are. with so many of the original posts coming in from "guests" there's no way to know, unless they come back to identify themselves, if our advice, opinions, conjecture ever reaches its target.

wouldn't it be nice to have more accountability? i say that in a couple of ways - first, to have the opportunity to know if we've actually made a difference by providing our thoughts; second, that if we've made gross misjudgments or misstatements, we'd find out.

there's erroneous information given out on here periodically, but i'm hesitant to be overly critical. this is literally a public forum, so we are all allowed to make our comments, be they on target or off base.

and i dare say, i am not infallible...so critique is not my habit.

Guest

Hey there - although the time taken to write the post may have seemed useless since the original question was posted in 2005, just wanted to let you know i came across it and it has helped me a lot =)

gmakerley · Posted: Mon Mar 23, 2009 10:51 am Post subject:

angel, it's so nice of you to respond and give us that information. this ought to be a lesson to all of us that it may never be too late to post a response to an original post, no matter how old it may be. if we are able to address a situation that may help someone now, it ought not to matter how long ago the original question was asked.

thanks again.

Guest

Mr. Akerley and All,

Eventhough the post is out of date, we find it very useful in Sept. 2010.

Thank you for your time and expertise.

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