Your Houston Refinance Resource

There has been a lot of discussion about the historically low Houston mortgage rates and the fact that right now is a great time to refinance your home mortgage, if at all possible. And considering some of the new programs being implemented to help homeowners with their mortgages and mortgage payments, it would be worth talking to your mortgage lender even if you think you might not be in a position for a Houston refinance right now. It might just turn out that one of these new programs is designed for people in just the kind of situation you are in; you just never know.

Once you’ve established that you can do a Houston refinance, and that it makes sense for you to do so right now, the next question will be; what to do with the savings you’ll be getting. While that might sound ridiculous, if you don’t make a plan for what to do with that extra cash, it will just ‘disappear’ into your day to day expenses and will never have the kind of impact on your life that it could.

In earlier articles we covered a couple of different approaches to what you might do with that money. In each example we used the hypothetical number of $175 in monthly savings from your new, lower rate Houston home loan. While that much money is nothing to sneeze at, it’s probably not going to get many people overly excited either. On the other hand, we showed that with a bit of disciplined effort, it could become something quite substantial that you could legitimately get excited about.

In example number one, we used the additional money to pay down credit cards carrying balances. In that example we used two credit cards; one with a $4000 balance at 16% and the other at 12% with an $8000 balance. We showed how you could apply the new savings to the minimum payments each month and shorten the pay back period from 23 years to just over 4 years.

In example number 2 we took the savings and applied it towards the principle on your Houston mortgage to help pay it off more quickly. Our example was of a loan amount of $225,000 at 5% fixed. By applying the $175 to the principle each month you would be able to shave over 7 years off your mortgage. That equal over $58,000 in interest you wouldn’t be paying.

The third option we want to discuss is investing that money each and every month. The investment goals could be anything from your retirement to a vacation to a child or grand child’s college expenses. Your investment motivations are completely your own; we simply want to show you what could be accomplished with this money.

In trying to predict what kind of return you might get from an investment, we have to make some guesses. We’ll use conservative numbers to be safe.

Let’s say that you start of with $2000 in an investment account and you’re going to add that $175 to it each month for the next 18 years (planning for a new child’s college expenses). We’re going to use a conservative annual rate of return of 7% for this example.

So what does baby have waiting when they turn 18? A bit over $83,000! I think most people would agree that that is a pretty good college fund to get started with.

Let’s say that instead of college for a child, you’re a 30 year old looking to retire at age 65. We’re also going to say that this account is starting off with a balance of ZERO, but it gets the $175 savings added to it each and every month. Given this situation, if you did nothing else for your retirement, by the time you were 65 years old this account would have over $300,000 in it. Again, not too bad.

Of course these are very ‘rough’, hypothetical numbers. However, they are very attainable. If they have whet your appetite at all for what you might be able to accomplish, you really should sit down with a Houston mortgage lender as well as an accountant or financial planner.

The main take-away here is that while savings may seem like ’small change’ at first, if you can be disciplined enough to apply those savings to a PLAN, you can have a major impact on your overall financial picture. Your Houston home mortgage is more than a bill; it should be part of your overall financial plan.