Does Combining Two Mortgages in a Refinance Make Sense for Your Situation?

Before you consult a home mortgage calculator with taxes to determine if combining two mortgages makes sense, you must first figure out whether you're even able to do so. Due to the changes in the mortgage lending arena, many people are ineligible to combine their mortgages. Let's review the stipulations.

What HARP Will and Won't Let You Do

The HARP Program, which stands for Home Affordable Refinance Program, is for homeowners who bought when the market was high and saw their property values sink drastically. They still have options to refinance their loans and take advantage of today's incredibly low interest rates. While this program has been extremely helpful for many homeowners, it is not necessarily so for those who want to combine two mortgages.

Private mortgage lenders may allow you to combine the two, but with a HARP refinance you are barred from doing so. If between both loans you owe more than your home is currently woth, then you do an option, which is asking the lender of your second mortgage to be subordinated to your first mortgage.

What this means is that they agree that the first loan will take prescient over the second loan. However, lenders have little reason to agree and as a result, this method is typically not successful. But, while you're trying to get approved, you can expect lenders to try and encourage you to refinance via their own terms. While this may seem tempting, in most cases it's not the best way to go.

What to Do If You Are Unable To Combine First and Second Mortgages

If you currently find yourself underwater, then your best option is to continue paying your loan and wait until you have equity in your home. It may be a good idea to make payments that come in at a higher amount than your minimum. If you're locked into a high interest rate, then remember that you will save money in the long run by paying extra now to pay the loan down if you get approved for a refinance at a lower interest rate.

The good news is that the government recently announced the continuance of historically low interest rates for at least the next two years. This gives you a time to build equity in your home as well as catching rates while they're low. Although i tcan be stressful, doing this can result in a significantly lower interest rate in the end, which can lead to you saving thousands of dollars over the course of the loan.  Utilizing a home mortgage calculator with taxes to determine your budget by estimating monthly payments is a great place to start.