Feasible to combine 1st mortgage ( 30 year ) with Equity line into a 15 year fixed or less?

Question

I have a 1st mortgage of $125K. I have an equity line ran up to $50K. First is on a fixed 6.75% 30 year. Equity line is on a variable rate can't recall what it is at the moment. We want to combine the two loans into one 15 year loan. Is this feasible or reasonable to do? I saw at bankrate.com that one lender was giving 15 year fixed at 4.5%. Can you get a 10 year fixed? Or even a 5 year fixed? I "might" consider the 10 but didn't find any rate quotes on a 10 year fixed and not sure if the rate is much better than the 15 year fixed. Can someone tell me the best route to go with this? I'm not too knowledgeable about refinancing and am trying to learn what I should look out for yada, yada, yada. All help greatly appreciated!! thanks, Ken

Answer 1

Check with several banks to find out their rates on 15 year fixed mortgages. Your credit score can have a big impact on what rate you can get. You can definitely pay off both your 1st mortgage and Equity line. Assuming $175k would be your new loan amount, the savings you would get by lowering your interest rate might or might not offset the increase in monthly payments because of the 15 year term. In the long run you will definitely pay less in interest and have it paid off sooner.
Be very careful using on line banks. I would really recomend a large well established bank like Chase, Wachovia or other major bank in your area.

Answer 2

How much is the house worth? If the total loan would be under 80% of the value, it IS feasible. That said, Unless you have addressed whatever caused you to run up the Equity Line, it is NOT a good plan in the long term. You are likely to run up more debt.

As for the 10 year loan, you will probably get the same rate as a 15 year loan, with slightly higher payments.

Answer 3

Its real feasible I did it a couple years ago when arm's werre going up I st is at 5.1% for 30 and 2 nd at 6.1% for 15. The other thing about doing this is if you get on hard times you can just make the payments. And if your making money hand over fist you can make extra payments.