Dear Dr. Don,
We presently have a fixed-rate home equity loan and no first mortgage. Can we change that into a 30-year first mortgage so that our payments are much lower?
-- Paula Payment
You can easily refinance to a new first mortgage. You'll have lower monthly payments, but may wind up paying a whole lot more in total interest expense.
Bankrate's refinancing calculator "Will you save by refinancing your mortgage?" lets you compare the costs of the two mortgages.
Some homeowners have to focus on the size of the monthly payment. Refinancing brings down the monthly nut so they can afford to stay in the house. Other consumers are concerned with minimizing the total interest expense by minimizing the interest rate and the term of the loan.
There's not one right decision, just a decision that's right for you. If you can't afford a high monthly payment, a new 30-year fixed-rate mortgage will bring down your monthly payments.
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