Question by shawnj985: Refinancing my mortgage and home equity loan?
I have started the process of refinancing my home equity loan from 9% to a lower rate. It currently has a balance of $ 10K.
I have also started the process of refinancing my home mortgage from 6.8 to around 5 something hopefully. It has a balance of $ 54k with 10 years to go on the current loan. I was originally thinking of just refinancing the mortgage with a 10 year payment period without taking out any additional moneys.
Question: Should I refinance my mortgage, taking out enough to also pay off my home equity loan as well? Thanks in advance for
Answer by John F
What was the initial term of your first mortgage? If it was 20 years or longer you’re probably better off not refinancing it. The interest portion of your fixed monthly payment is much larger in the first half of a fixed rate mortgage loan’s term. After you go past that point, the same monthly payment has an ever increasing amount of it applied to the balance. So if you refinance your first you’ll be starting all over again with higher interest loaded payments.
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