Mortgage consolidation depends on a few things. Firstly, you must understand two main terminologies like a ” term refinance” and a “cash out” refinance. With the “term refinance,” it happens when the first and second mortgages are taken out at the same time. Whereas the second term known as the “cash out” refinance happens when the mortgage is placed on the home at different times.
Steps To Take To Consolidate Two Mortgages Into One
Ask for information about the mortgage refinance and make sure to tell your lender you want to combine the first mortgage and the second mortgage into one.
Find a lender and seek financial advice. Do your homework about your mortgages and if it’s worth going through a consolidation.
Fill out the Uniform Residential Loan Application. You will most likely get closing costs and other fees waived for your application when you apply.
You need at least two of your most recent pay stubs for everyone on the loan, your w2 forms and tax returns.
Mortgage Consolidation Calculator
To have an idea of how to input the numbers using a mortgage consolidation calculator click here. The calculator includes mortgage insurance premiums, mortgage payments, and non-mortgage payments, which make up the total monthly payment. A more important calculator that can help homeowners with two mortgages is found here.
Meet the Criteria of Qualification Before Attempting to Apply
The whole idea of consolidating your mortgages makes sense if you have enough equity accumulated in your home(s). You must get complete financial/lender counseling before attempting to consolidate your mortgages because it may not be for everyone with any debt. If you just want a relief from a few credit cards, or take trips around that world, then it is not advisable. But if you have overwhelming expenses such as business expenses or medical bills, then it makes more sense to take on the task. Remember if you have too much credit card debt, you will not qualify for the “cash out” refinance. Because you won’t be able to meet the DTI (debt-to-income) prerequisite; your income must be more than the amount of debt you owe.
To consolidate your mortgage, you need to take into account your credit score and to make sure it’s not lower than 700. Maxing out your credit cards will discredit your ability also to qualify.
What you should consider and have in mind while you plan to consolidate your mortgage is, if the percentage of the first mortgage is lower than the percentage of your non-mortgage debt then it will benefit you more. However, if it’s the opposite, then you may want to slow down till that is fixed or corrected if possible.