With only 5 years left on your first mortgage, it may not "pay" you to refinance, even with a lower rate - you need to look closely at the numbers.
First, what are you currently paying monthly on your 1st mortgage? Are you comfortable with these payments?
Second, what are you paying on your HELOC? Interest only, or are you paying down the balance? Add these two numbers together & try to include a P&I payment for your HELOC.
Third, now find out what the cost will be to refinance both loans. What are your closing costs going to be, including the appraisal, the title fees & your lender costs. Be careful, you may hear things phrased as "it won't cost you a dime out of pocket" or "the only check you write is for the appraisal" when in fact, you will be using the equity you have in your home to pay the closing costs.
Third, what will your new mortgage payment be if you do decide to refinance? Will the difference in payment & closing cost be worth it to you, especially since you have such a short time left on your mortgage & most of that mortgage payment is going towards reducing your balance. It may sound counterintuitive, but depending upon how your numbers work out, you may be better off concentrating on paying off your HELOC first, then attack your first mortgage. You are vulnerable to the market if things shift & short term interest rates rise. Most HELOC's that I am familiar with can adjust monthly, however, they rarely will given the index, usually the "Prime Rate" is normally tied to the "Fed Funds" rate, & that rate does not move too often. That said, look up the "Prime Rate" history & you will see a dramatic increase in rates from the not too distant past to where you are now. Further reason for paying off your HELOC first.
You may also want to contact the bank holding your HELOC to see what is needed to convert it to a fixed rate loan. Many times they can do this at no or minimal cost to you.
I hope this helps you out with your decision. Please feel free to contact me if you have any further questions, I'd be glad to help.
All the best,
Roswell Moore, CMPS
Certified Mortgage Planner
We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, FHA (starting at a 580 score), FHA Streamline loans (no minimum credit score, no appraisal required) Go Green rehab loans, HomePath, Investor Friendly (10 financed properties), VA, USDA, Jumbo, Conventional, plus, we allow Escrow hold backs!