Consolidating two mortgages

3a Refinancing One Mortgage 3b Refinancing Two Mortgages One calculator assumes you refinance only one mortgage.

You would save 92 by refinancing the 8.75% first mortgage into a new 8.125% first with one point.

Total savings over 6 years from refinancing both mortgages would be 11.

"I have an 8.75% first mortgage with a balance of 1,000, and a 12% second mortgage with a balance of ,300.

The second mortgage brought our total mortgage debt above the value of the property at that time, which is why the rate is so high.

When you have two mortgages, you must obtain price quotes on a new first for the amount of the balance on the existing first, and on a new second for the amount of the balance on the existing second.

You also need a quote on a new first for the amount of the balance on both existing loans.

The calculators also show the breakeven period, which is how long you must stay with the new loans to just break even.

Based on your information, the calculators reveal that over your 6-year time horizon, you would save 19 by refinancing the 12% second mortgage into a new 30-year second at 9.5% with one point.

It is all too confusing.” Critically important are the terms of new loans to refinance, relative to the terms on the existing loans.

This will depend on what has happened to mortgage interest rates, the value of your property, and your credit rating since you signed for the original loans.

However, if the remaining term on the existing loan is short, expect the reverse -- the refinance benefit can be larger for a high tax bracket borrower.