If you are a homeowner struggling with the payments for your second mortgage loan, low mortgage rates could help you take back your budget by combining your first and second mortgage into one payment. When your home is secured by only one loan you will qualify for a lower mortgage rate which could result in a lower, more manageable payment. Here are several tips to help you decide if now is the right time to refinance and combine your higher interest mortgage loans.
Why Consider Mortgage Refinancing?
The obvious benefit of mortgage refinancing is that you will have only one monthly payment to manage, a lower mortgage rate, and a payment that could be much lower than what you’re currently paying. If you’re interested in paying down your mortgage more quickly you have the option of shortening the term length of your new mortgage, allowing you to pay more towards the principle balance of your loan. Paying more towards your loan balance will save you money in the long run by paying less in finance charges over the lifetime of your mortgage.
Consider the Cost of Refinancing a Second Mortgage
Whenever you take out a new mortgage loan you will be required to pay fees for securing the loan. These fees can include an appraisal, title search, application fees, processing fees, and various third party closing costs. If you are consolidating your second mortgage you should have no problem recouping theses expenses based on your potential savings; however, it is still important to shop around compare loan offers. You can also save yourself a lot of money by dong your homework and learning how to negotiate for a wholesale mortgage rate.
What are Wholesale Mortgage Rates?
There are two kinds of mortgage interest rates available on the market today. There are the retail mortgage rates that include commission based markup offered to the majority of homeowners today, and wholesale rates offered to those that know how to avoid this incentive based markup. This markup of your mortgage interest rate is known as Yield Spread Premium and agreeing to a mortgage that includes it results in overpaying thousands of dollars unnecessarily.
What is Yield Spread Premium?
Simply put, Yield Spread Premium is the unnecessary markup of your mortgage interest rate to get a commission from the wholesale lender behind your loan. For every quarter percent you unknowingly agree to overpay, your broker receives a bonus of one percent of your loan amount. This kickback to the broker is paid in addition the origination fees you are already paying for the mortgage broker’s work.
Consolidate Your Second Mortgage with a Wholesale Mortgage Rate
By consolidating your first and second mortgage loans with a wholesale rate and avoiding junk fees you can save yourself thousands of dollars. If you would like more information on how to refinance your second mortgage, register for a free video guide.