If you have two mortgages you may want to consider merging the two together. This is known as mortgage consolidation and can offer you many benefits. Three of these benefits are listed below and can help you make the right decision.
Lower Interest Rate
If you got the second mortgage with a fixed rate and the interest rates were high when you got the mortgage, consolidation may be a good option. This is especially true if the current interest rates are much lower. You also may have had bad credit when you got your mortgage loan, which can result in a higher interest rate.
Consolidating the mortgages with a lower interest rate will reduce your monthly payments. You could then spend that extra money on the loan to pay it off even faster if you prefer or spend or save the money elsewhere.
Pay off Mortgage Quicker
Mortgage consolidation will allow you to pay off your mortgage loan much quicker. This is if you will consider choosing a shorter loan when setting up your new loan. Your monthly payments will likely be higher than they would if you do this. Still, paying off the loan faster means you are not paying near as much on interest. If you calculate this, you will see this will save you a substantial amount of money in the long run.
Paying off your mortgage faster will give you a lot of freedom. For example, you will have a lot of money to save each month. You may want to sell the home to purchase another one. Having the home paid off means all money from the sale will be put into your pocket.
Can increase Your Credit Score
Something you may not consider is that doing a mortgage consolidation can increase your credit score. If you currently have low credit score you will find it very difficult to get credit cards, loans, and more. In some cases, employers look at credit scores to determine if they want to hire someone. Car rental companies may look at credit scores.
Having a high credit score will allow you to get just about any loan that you want. Not only this, but the loan will also have a lower interest rate than it would if you had a lower credit score.
Talk with a financial planner about mortgage consolidation and they can explain to you in detail how this will work