I'm considering refinancing my current mortgage, which would probably lower my payments by ~$100/month. However, I'm also planning on buying a second house in the next few months, which means I'll be taking another mortgage.

Does it make sense to refinance now, or it would lower my chances for a good rate on the second house?

I've refinanced a year ago already, lowering my payments by ~$150 then, and the rates since continued to go down...

  • Just curious.. What rate were you at and what rate are you considering? – Alex B Oct 25 '11 at 17:19
  • @Alex - 4.75 vs 4.275. Including the closing costs, I'll break even within a year if I refinance. Last refinance was for free, I didn't pay any closing costs. – littleadv Oct 25 '11 at 17:45

The extra $100/mo will certainly add to your borrowing ability, debt to income ratio. Your question seems to be regarding the slight ding to your FICO score for a hard pull. And my question back to you is whether your score is that borderline. When you say "in a few months" why not wait a bit and talk to the bank at the same time for both. They might even cut you a deal for not having to review your applications separately. And it will only be one credit score pull.

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  • I think I'll go with that. – littleadv Oct 25 '11 at 20:36
  • @littleadv: Did it go like what JoeTaxpayer recommended (mortgage with the same institution and you refi + new title in one go)? – f1StudentInUS Jan 30 '12 at 6:26

Another way to look at this is that the current house payment is a certainty; the new house payment may or may not happen and it's not a done deal until the papers are signed and the deal is closed.

For that reason alone (that you don't know if and when the additional mortgage is going to happen) I would refi the main residence now - the sooner the savings kick in the better.

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