Portland Refinance Help

You’ve no doubt read many times in many different places that refinancing your Portland mortgage at today’s low mortgage rates could possibly save you a lot of money. It’s normal to look at how much extra money you’ll have every month with a new, lower mortgage, and simply be content with that extra cash. The problem with this approach is that very often, this extra savings and extra cash each month never really seems to effect your life in any meaningful way. It’s simply way too easy for your new found money to simply get absorbed into your everyday expenses and before you know it, it’s like it wasn’t even there. The intent of this article is to point out what the true potential is in these otherwise seemingly small savings. There is no doubt that this will require a bit (OK, more than a bit) of financial discipline from you, however, hopefully when you realize what the long term effect can be, that it will inspire you to make the necessary effort.

Let’s run some numbers based on an assumption that your new Portland mortgage will be a fixed rate mortgage on a 30 year term. With this new mortgage, let’s just say that you’re now paying $175 less each month. This is a reasonable amount of money, but it’s no ‘lotto’ right? Well what are you going to do with that money?

In a previous example we talked about paying off other debts, such as credit cards. As a reminder, in that example we said there were two cards, one with an $8,000 balance at 12% and the other at $4,000 balance at 16%. We also assumed that you were making just above the minimum necessary monthly payments and that by doing so it would take you TWENTY THREE YEARS to pay them off…. However, if you were to use a disciplined approach and used your new found savings to systematically pay them down, you could reduce those 23 years to just over 4 years, saving a TON of interest on them.

A second option for your savings could be to apply them to your existing Portland mortgage every month to help pay down your principle faster. By doing this each month you could reduce 30 years it is scheduled to take to pay off your mortgage and again, save you a lot of money. How much? Let’s take a look.

We’ll need some specific figures to look at, so let’s set up a hypothetical scenario. Let’s say your mortgage is for $225,000 at a rate of 5% for 360 months (30 years). If you were to apply that $175 savings each and every month towards the principle balance, the time it would take you to pay off the loan would be reduced by more than SEVEN YEARS, which would save you over $58,000 in interest on the loan! That is some serious savings!

It’s obvious that the concept of refinancing to a lower rate is very appealing to a lot of people. However, the thing that often gets overlooked is how significant a difference a small change in your Portland mortgage rates can have on your long term net worth. As we’ve all seen in the current economic situation we find ourselves in, a bit of us.

So whether you’re considering a Portland refinance or if you’re considering getting a purchase money loan, it’s worthwhile to take a moment to realize what small but regular efforts can make on the big picture of your financial situation.