Is it best to refinance 1st and 2nd mortgage into one?
Answer:Yes, most often it is. Most often refinancing a 1st and 2nd mortgage into one will lower your payments. Even more so, if you are planning to keep your home for a while and one of your mortgages has adjustable rate, it may be more than desirable that you refinance.
Also, unlike old times when people waited for mortgage rates to drop 2-3% before they refinance, calculations show refinance is now worth to consider any time the rate goes down around a 0.5%. Also, refinancing both your 1st and 2nd mortgage you will not only have consolidated mortgage payment in one, but due to the lower rates you may save a couple of hundreds on the monthly payment.
When not to consolidate 1st and 2nd mortgage?
If you have not built enough equity on the home, consolidating a 1st and 2nd mortgage into one may force you to pay PMI and if that is the case you may like to refinance them separately. Since refinancing entails new closing costs, make sure your credit is good before you refinance the 1st and 2nd mortgage. You may not be eligible for low rates refinance if your credit score is not good and paying all those closing costs for a high rate loan does not make much sense.
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