How to Refinance Two Homes

Refinancing two mortgages into one can be a powerful way to save money over time.

Owning two properties gives you several options when you consider refinancing both mortgages. Each option has a differing relationship between the loan balance and the interest rate, so take a careful look at both before signing any agreement.

Instructions

1. Examine your current individual mortgages. Add the interest rates together and divide by two to get you an average, blended interest rate. Now you can use the blended interest rate to compare to any other offers you receive.

2. Apply for a new mortgage with a lender, such as a national bank or credit union. Though banks have restrictions and guidelines on financing multiple properties, they are often only on owners of four properties and up. The lender will check your credit score, the amount of equity in the properties, and your debt to income ratio.

3. Compare the interest rate offered on the new mortgage that carries the total balance to the old one that carries the debts separately. If the new interest rate is lower than the blended interest rate, then the offer is good provided that the debt is paid down in the same length of time or less. If the new rate is higher, but the debt is paid off significantly faster, then the offer could still be good. However, if the new rate is higher than the blended rate, and the schedule is the same or longer, than the offer is poor, and you should consider shopping for another rate.

Tips & Warnings

• Keep in mind, you can refinance each mortgage individually for lower interest rates, but you would still have two separate payments to make each month.

References

• Refinancing Advice for Homeowners With Multiple Properties