- May 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Exploring Options for Consolidating Mortgage Balances
I recently purchased a home in 2021 utilizing a piggyback mortgage, a less common option that allows individuals with limited funds for a down payment to secure a home loan. My current mortgage breakdown consists of an 80% conventional loan with a balance of approximately $520,000 at a favorable 2.875% interest rate, supplemented by a 10% down payment of $75,000. Additionally, I have a 10% HELOC with a $51,000 balance, carrying a higher 6.5% interest rate, which I used to finance the home purchase.
I am contemplating the possibility of consolidating the HELOC balance with my conventional mortgage to take advantage of the lower interest rate and potentially save on monthly interest costs. However, the HELOC and conventional mortgage are held by different banks, making the process uncertain. While I am not inclined to pursue a complete refinancing given the competitive rate of my conventional loan, the prospect of merging the HELOC balance at a more favorable rate is appealing.
As I consider my options moving forward, I am seeking advice on the feasibility of consolidating these balances and any potential implications. The AI Legalese Decoder can assist in navigating the complexities of mortgage agreements and evaluating the practicality of combining these loans, providing valuable insights to make informed decisions regarding financial strategies and optimizing interest savings.
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I can’t imagine why either bank would be motivated to do this, but can’t hurt to ask I guess. Worst they can do is say no.
The only way to do this is to refinance the original loan at a higher balance to cover your HELOC debit.
Any new loan will have an interest rate much higher than your sub 3% rate. So it would in aggregate increase your monthly payment not lower it.
You would have to refinance to combine them and you’d have to have a LTV below 80%.
And you’d have to get a rate of about 3.2% to break even. Current rates are over 7%, which is even higher than the HELOC.
You’d have to refinance your mortgage at today’s prevailing interest rate
I think in order to do this youll have to apply for a new mortagage that covers both loans.