Your Houston Refinance Resource

You’ve no doubt read many times in many different places that refinancing your Houston mortgage at today’s low mortgage rates could possibly save you a lot of money. It’s very typical to look at your existing interest rate, compare it to the new rates, and be happy calculating the extra cash you’ll have every month with a new mortgage. The problem is that more often than not, that extra money you gain doesn’t really seem to DO anything for you. With all of your everyday expenses, it’s just way too easy for this new found cash to get re-distributed without making any real, significant impact for you. Hopefully this article will illustrate that there is actually some pretty significant potential for you to impact your financial picture with these savings. There is no doubt that this will require a bit (OK, more than a bit) of financial discipline from you, but the hope is that when you see what the outcome could be, you’ll find it to be worth your while.

Let’s run some numbers based on an assumption that your new Houston mortgage will be a fixed rate mortgage on a 30 year term. Also for the sake of argument, we’ll say the new mortgage is saving you a total of $175 each month. A bit less than $200 is a nice addition each month, but nothing to get overly excited about, right? Well, it depends… what are you going to do with that money?

One option that we discussed in a previous example was paying off other debts, such as those on existing credit cards. In that hypothetical scenario we used the numbers of two cards with balances of $4000 and $8000 at interest rates of 16% and 12% respectively. 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…. On the other hand, if you were to use your monthly savings to pay those debts, you could reduce the total pay-back period from 23 years to about 4 years, saving you a LOT of money.

Another smart application of that money would be to apply it towards your existing Houston mortgage to help pay down the principle faster. By doing so, you could shorten the length of time it takes to pay it off and save you a whole lot of money. Are you wondering how much you might save? Let’s take a look at some numbers.

We’ll need some specific figures to look at, so let’s set up a hypothetical scenario. We’re going to say that your new mortgage is for $225,000 on a 30 year program at a fixed rate of 5%. If you were to apply that $175 savings each and every month towards the principle balance, you would be able to pay off your loan over 7 years early saving more than $58,000 in interest payments! That kind of money is something to get excited and motivated by!

It’s obvious that the concept of refinancing to a lower rate is very appealing to a lot of people. What sometimes gets overlooked is the true power of what a little financial discipline can do for your long-term financial picture when applied to your Houston mortgage rates. As we’ve all seen in the current economic situation we find ourselves in, a bit of us.

So whether you’re considering a Houston refinance or you’re looking to make a purchase, do your best to look at the power of small but consistent efforts and how it can impact your overall financial picture.