Is refinancing two mortgages into one a good idea?


Generally yes, it is.

Refinancing two mortgages into one may be a very successful option, under certain circumstances. Not always, though. Very often it won't be possible to tell whether or not to refinance two mortgages into a single first mortgage loan, or refinance separately into two different mortgages without very thorough and precise calculation of many factors.

When refinancing two mortgages into one is a good choice?

If you have two mortgages with combined balance below 80% of your house value, and the rates of at least one of it are high, you should refinance them both. In that case consolidating mortgage debt through refinancing two mortgages almost always will be successful, as you will not have to pay mortgage insurance.

Even more, if your credit is particularly good, and your house value has remained the same or even appreciated, you should refinance, especially so if mortgage rates are considered low. You may have to pay immediate refinance fees of several thousands, but reducing the rate and combining both loans into a first mortgage loan will make things easier for you and save you a lot of money in the long run.

When refinancing two mortgages into one is not a good choice?

However, not always refinancing two mortgages is a clear win. Most often, the combined value of the mortgages will go over house value, rates will be on the rise, and property value may have declined. In this case, separate scenarios for refinancing two mortgages together will be necessary and all details, such as mortgage balance, rates, current house value, lender GFEs for combined and separate refinancing have to be considered.

You can't do without mortgage calculators to determine how to proceed with refinancing your two mortgages in that case.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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