Why I Finally Combined My Two Mortgages Should’ve Done It Years Ago

Okay so here’s the deal. I had two mortgages for like four years before I finally got smart and combined them. Kicking myself because if I’d just done this sooner, I would’ve saved probably $15,000. Maybe more. But whatever, at least I figured it out.

Let me back up. Payment was around $1,020 a month just for principal and interest. 

The whole thing was shot, leaking in three places. The contractor said it was gonna fail within a year. The quote came back at $22,000. Didn’t have that sitting around.

So I took out a home equity line of credit. Seemed manageable.

When It Got Heavy

The first year or so was fine. Two mortgage payments – $1,020 and $190. Got used to it. Over $14,000 a year going to the bank.

Kind of annoying honestly. But he comes over one day and asks how much I’m paying in interest on both mortgages.

I had no idea. Knew the interest rates but hadn’t calculated how much interest I was paying annually. So we sat down and did the math. Between both mortgages, paying about $11,000 a year in interest. Just interested! Not even paying down principal that much.

He goes you know you can refinance the 1st and 2nd mortgage together, right? And I’m like nah, that sounds complicated. He said it’s not, you just get one new loan that pays off both. Potentially save a bunch on interest if rates are lower.

Told him I’d look into it. Then I didn’t for like six months because I’m lazy.

What Made Me Actually Do It

What finally got me off my butt was getting my annual mortgage statements in January. You know, those forms showing how much interest you paid for tax purposes. Looking at those numbers in black and white was brutal.

Previous year I’d paid $9,870 in interest on my first mortgage and $1,650 on my second. That’s $11,520 just in interest for the year. Only paid down my principal by like $4,500 total on both mortgages combined. Most of my payments were just going to interest.

That’s when I started googling about refinancing. Found out yeah, you can definitely refinance 1st and 2nd mortgage into one loan. And with rates having dropped, I could probably lower my interest rate and save money.

So I finally made some calls.

Talking to Lenders

Called three places. My original mortgage company, a credit union my coworker recommended, and an online lender.

The first conversation was with my original mortgage company. The lady asked a bunch of questions – how much I owed on each mortgage, rates, house worth, credit score. I knew most answers because I’d actually prepared this time.

Still owed about $168,000 on the first mortgage and $23,000 on the second. My credit score was 715 which she said was good.

Currently paying $1,210 and this would be $980?

Nope, $980. Because I’d be refinancing at a lower rate than both my current mortgages, especially that 6.75% second mortgage.

But I remembered my brother-in-law saying to get multiple quotes. So called the credit union next.

The credit union guy was super helpful. Same questions, pulled my credit, gave me a quote. 4.375% with closing costs of $3,400. Monthly payment would be $953.

The option to refinance 1st and 2nd mortgage into one loan exists specifically for people like me who ended up with two mortgages. 

Even better than my original mortgage company. And lower closing costs too.

Then called the online lender. They quoted 4.5% with closing costs of $4,100. Monthly payment around $970.

So the credit union had the best deal. $953 per month compared to my current $1,210. That’s $257 savings every month. Over a year that’s over $3,000.

Almost Talked Myself Out of It

I started thinking about all the hassle.

If I refinanced and saved $3,000 a year, that was 25% less money going to the bank. Put that way, yeah, it seemed worth the hassle.

Also, closing costs were $3,400 but I was saving $257 per month. That meant I’d make back the closing costs in about 13 months. After that pure savings.

I called the credit union back and told them I wanted to move forward.

The Application

They sent me a list of documents. Two years of tax returns, two months of pay stubs, bank statements, homeowners insurance, copy of my driver’s license.

Took a few days to get everything together but honestly wasn’t terrible. Most of it I could download from online accounts.

One annoying thing – they needed me to write a letter explaining a $3,500 deposit in my checking from four months ago. It was from selling my motorcycle but apparently that needed explanation. Felt invasive but whatever, wrote the letter.

About two weeks after submitting everything, they ordered an appraisal.

Even better than I’d estimated. The loan officer said we had plenty of equity and everything looked good to close.

Closing Day

Closing was scheduled about 35 days after I applied. I had to go to a title company office Thursday afternoon. Took off work early.

The option to refinance 1st and 2nd mortgage into one loan exists specifically for people like me who ended up with two mortgages. 

I thought it would take hours like when I bought the house. It took maybe 45 minutes. Signed papers, initialed pages, dated everything. The closing agent explained each document but honestly I just wanted to get it done.

One surprise – had to bring $890 to closing for some prepaid property taxes and a courier fee. They’d told me a few days before so I’d wired the money, but still felt like a hidden cost.

Four Months Later

First payment wasn’t due for about six weeks after closing. That was nice – had a month and a half where I wasn’t making any mortgage payments. Used that money to build up my emergency fund.

When that first payment came due, seeing $953 instead of $1,210 felt great. Set it up on autopay.

It’s been about four months now since I decided to refinance my 1st and 2nd mortgage together. That extra $257 a month has been really helpful. Not life-changing money but definitely noticeable. Been putting most of it into savings. I have about $800 more saved than four months ago.

Also nice to only have one mortgage payment instead of two. Simpler. One due date. One statement.

The Math That Made Me Feel Dumb

Here’s what really gets me. I waited four years to do this.

Instead I just kept making two payments at higher interest rates because I was too lazy to make some phone calls and fill out paperwork. It cost me twelve grand.

Don’t be like me. If you’ve got two mortgages and rates have dropped, at least look into refinancing. Make a few phone calls. Get some quotes. See what you could save.

What I’d Tell Someone Else

If you’re thinking about whether to refinance 1st and 2nd mortgage together, here’s my advice:

First, figure out what you’re currently paying total for both mortgages. Not just monthly payment but actually look at your interest rates and how much interest you’re paying annually.

Second, call at least three lenders and get quotes. The difference between my best and worst quote was almost $200 a year.

Bottom Line

Had two mortgages at relatively high rates. Rates dropped but didn’t pay attention for years. Finally got off my butt and refinanced both into one loan at a lower rate. Now saving $257 a month and only have one payment to worry about.

Should’ve done it way sooner. But at least I finally did it.

If you’re in a similar situation – got two mortgages, paying a bunch in interest every month, rates are lower now – seriously look into refinancing. The process wasn’t nearly as hard as I thought. And the savings are real.

The option to refinance 1st and 2nd mortgage into one loan exists specifically for people like me who ended up with two mortgages. Take advantage of it. Your future self will thank you.

Just don’t wait four years like I did. That was dumb.