How to Get Rid of a High-Rate Second Mortgage

There are several ways to pay off a second mortgage.

If you have a high-rate second mortgage it could be costing you a significant amount of money in terms of finance charges. Over the life of your mortgage, you will pay far more in finance charges than you would if the rate were lower. Your payments will be higher because mortgage finance charges are generated monthly with a high-rate second mortgage. There are several ways to go about paying off a second mortgage; it's just a matter of determining which one helps you meet your goals and objectives.

Difficulty:

Moderately Easy

Instructions

1. Contact your first mortgage lender to see if you can combine your first and second mortgage loans. First mortgages tend to have lower rates than a second mortgage. If rates are low, you will benefit from receiving the lower rate of a first mortgage.

2. Shop around with other lenders to see if they may be able to combine your first and second mortgages if the rates are favorable.

3. Pay off your second mortgage with cash, if you have cash in the bank.

4. Look at your combined credit limits on your credit cards. You may be able to pay off your high rate second mortgage by using credit cards. If you do a balance transfer, sometimes you can get a 0 percent promotional rate for six months to a year.

Tips & Warnings

• If you use credit cards to pay off your second mortgage, make sure you get a good interest after the promotional rate expires.

• If your first mortgage lender combines your mortgages you could lose your low rate for your first mortgage. If your first mortgage rate is 5 percent, for example, and your second rate mortgage is 17 percent, but the rate to combine both is 8 percent, you may want to see if this works in your favor.