Dear Dr. Don,
I have three mortgage loans that have three different interest rates. Should I consolidate them into one mortgage? I need to save money and I just can't do it with all these loan payments. Here are the particulars on the loans:

* First mortgage: a $100,300, 30-year fixed loan at 6.25%, with an $840 monthly payment and 18 years left on the loan.

* Home equity loan: $55,200 at 6.175% and with an $840 monthly payment.

* Home equity line of credit: $19,100 HELOC at 2.75% and with a $241 monthly payment.

The value of my New Jersey home is about $325,000. I have a credit score of 731.
-- Jackie Join

Dear Jackie,

While you have a great rate on the home equity line of credit, or HELOC, it's only a small fraction of your outstanding mortgage debt (11%). You'll have a hard time getting that lender to agree to keep the loan outstanding when you refinance the other two loans. Since the other two loans have interest rates well above today's market rates, and are about 89% of your mortgage debt load, you certainly are a candidate for refinancing.

Even though you should be able to refinance at a lower rate, if you extend the mortgage term out past the existing loan terms, you can wind up paying more in total interest expense. Your goal, assuming you can afford the new consolidated payment, should be to minimize your total interest expense. The weighted average maturity of the three loans is a little more than 14 years. To my mind, that makes you a candidate for refinancing with a 15-year loan. At this writing, Bankrate's national average for a 15-year loan is 4.28%.

I used Bankrate's mortgage calculator and came up with a monthly payment of $1,316.13 and total interest expense of $62,303.52. That's substantially below your stated payments of about $1,921. You can use Bankrate's mortgage debt consolidation calculator to figure out how much interest you will save by consolidating these loans into one 15-year mortgage.

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