Portland Refinance Help

Refinancing your Portland home loan is a great way to save money on your monthly housing expenses. It’s always nice to have a bit more money left at the end of the month. If you’re not careful, this extra cash can easily just get absorbed into your day-to-day expenses. On the other hand, if you are careful and disciplined, this extra money can go a long way towards helping your overall financial situation. We’ll outline a few of those possibilities here.

The biggest thing to realize is that it doesn’t take a lot of money every month to have a significant impact on your long term situation. There are three primary considerations for how to apply your new found savings to best impact your long term financial goals.

1. Applying it to higher cost debts such as credit cards to pay them down (or better yet, pay them off completely)

2. Apply it towards paying down the principle on your mortgage

3. Invest the funds towards bigger goals down the road such as a child’s college expenses or your retirement fund

If you do have other debts (like most people) such as several credit cards or maybe a car loan, it is important for you to compare the costs (i.e. interest rates), balances and mandatory minimum payments to one another. Making the assumption that you can currently make the minimum payment, you should organize and prioritize these debts by the most expensive first (highest interest rate, not highest balance), and then start applying the extra money towards that to pay it off as soon as possible.

To illustrate, we’re going to use the following hypothetical debts: Credit Card 1 with a $4,000 balance at 16%, Creditcard #3 carries a balance of $8,000 at 12%, and a Car Loan for $21,000 at 4%. Let’s also say that through your mortgage refinance you’ve been able to gain a savings of $175 per month.

Assuming you were making just over the required minimum monthly payment on your two credit cards, the time it would take you to pay them off completely would be twenty-three years (if you didn’t add anything to the balance in the meantime). On the other hand, if you wanted to put that $175 per month towards paying these cards off in a systematic manner, this is what we would suggest:

Pay off the higher interest rate card first while still making minimum payments on the second. Once the first card is eliminated, apply the $175 to the next card (remember to also apply the minimum payment you had been making to BOTH cards). By sticking to this plan you would be able to pay off BOTH credit cards in only a little more than four years. That’s a whole lot less than twenty-three! Consider how much money you’ll be saving in interest payments over those 19 years…

So as you see, refinancing a Portland mortgage can make a lot of sense for your short term needs, but it can have a massive impact on helping your long term financial picture too.