You may be carrying two mortgages for a number of reasons. If you are one such borrower, you may want to consolidate your mortgages, depending on whether this decision would help you meet your financial goals. The four primary benefits of consolidating your two ♑mortgages are lowering your interest rate, minimizing variable-rate mortgage risk, repaying your debt faster, and reducing your monthly payments.

4 Reasons to Consolidate Your Mortgages

Whether you are w🧔orking with a new mortgage lender or applying for a loan with your current lender, here are four reasons to consider consolidation:

1. Reduce Your Interest Rate

One main reason many people consolidate their loans is to lower their interest rate, which can save them money in the long term. The lower the interest rate, the less you will pay in total over the whole term of the loan. Using a mortgage calculator can help you estimate these costs t🌃o see how they fit in your budget.

You could potentially get a lower interest rate if:

• Mortgage rates have declined since you took out your mortgage
• Your credit standing has improved
• Your adjustable-rate mortgages (ARMs) have adjusted and increased your monthly payments

2. Eliminate the Riskಌ of✤ a Variable-Rate Mortgage

Payments are often lower at the beginning of a 澳洲幸运5官方开奖结果体彩网:variable-rate mortgage, so you may purchase a home you can afford now, but not later. As the introductory period ends, you could find that the new payment does not fit into your budget. Consolidating your mortgages into a single fixed-rate mortgage eliminates the risk that your payments will rise.

Consolidating to a fixed-rate mortgage from an adjustable-rate one can be a particularly good move when 澳洲幸运5官方开奖结果体彩网:overall interest rates are relatively low.

3. Pay Off Your Loans Faster

Some homeowners consolidate both loans into a single payment to have a shorter loan term. With a shorter loan term, the total amount of interest you will pay is lower, and you will fully own the p♉roperty sooner.

However, remember that the monthly payments will likely increase when you consolidate to a shorter loan term. For example, payments on a 30-year fixed-rate mortgage with a 6% interest rate would be roughly $2,010.91 per month (with property taxes and homeowners insurance). With a 15-year mortgage with the same terms, your payment would be about $2,694.97, according to Investopedia's mortgage calculator tool.

4. Lower Your Payments

If your budget is tight, you may want to consolidate to lower your monthly payments. If you can't get a loan with a lower interest rate, you can do this by taking out a longer-term loan.

Keep in mind that decreasing the payment amount with a lon🌜ger loan term will usually increase the total intere🤪st you pay.

With this strategy, you will put less of your monthly payment toward your principal. Interest is front-loaded into mo🍌st mortgages, which is why a smaller amount of your payment goes toward principal in the early years of a new mortgage.

The Bottom Line

If you consolidate your mortgages, make sure the move benefits you in the🎃 long run. Look at the total amount yo🎶u will have to pay on the loan and how you will build up equity. Simply comparing payments is not enough to determine whether a consolidation is right for you. You also need to weigh the cost of interest payments.