Some borrowers are immediately turned off by the looks of the interest rate for a second mortgage, since they are often much higher than rates that people commonly discuss (which are commonly rates for excellent credit, low LTV, single loan). However, a good way to see what your two mortgages would look like, in terms of rates, if it was one loan is to take a weighted average of the two. If its an 80/20 loan, multiply .8 by the first loan amount, then .2 by the second loan amount, and add those two numbers together. This will give you an excellent sense of what your overall, weighted, interest rate is, and puts the higher rate second mortgage into better perspective.

Combining your second mortgage is a great option if you currently hold a home equity loan or a home equity line of credit.

These home equity loans are typically fixed for a short time at a "teaser" rate which starts very low and adjusts after 1 month or 6 months depending on what instituational guidelines apply to that particular loan. Many homeowners do not realize that a low teaser rate starting at 4% can jump dramatically to as high as 8% or even higher! Thus they end up paying a lot more than anticipated.

Another key factor to look for is whether or not your second mortgage or home equity loan is an interest only payment. The interest only option is typically only available on equity lines of credit and equity loans. Many a homeowner has realized that keeping their running balance on their loan while only paying the minimum results in the principle of their loan not being reduced at all over many months and even years.

If you fall into one of both of these situations with a second mortgage, it may be very wise for you to seek the help of a qualified mortgage professional.