Portland Home Mortgage Guide

Refinancing your Portland mortgage is a great way to save money on your monthly housing expenses. Paying less means you have more money in your pocket 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.

It doesn’t take a huge amount of monthly savings to have a big impact on your long term future. There are typically 3 areas that can be addressed when someone wants to take advantage of these new found savings from a mortgage refinance to improve their net worth.

1. Paying down other high-cost debt, such as credit cards and possibly auto loans

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

3. Using the money to invest in future goals such as retirement or a college savings

If you do have other debts (like most people) such as several credit cards or maybe a car loan, it’s important that you compare their balances, interest rates and minimum required payments. 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: First Credit Card with $4,000 balance at 16%, Credit Card 2 with a balance of $8,000 at 12%, and finally a car payment on a loan of $21,000 at 4%. Also for this purpose we’ll assume you got an additional $175 per month after your mortgage refinance.

Let’s say you’ve been making the minimum payments plus a little extra towards the balance; it would take you 23 years to pay them both off completely (and you would have to refrain from adding anything to the balance during that time, or else it would just take longer). If you were to decide to use that $175 to regularly apply towards these existing debts in an effort to pay them off, this is how we would recommend you approach it:

First, pay off the highest interest card while maintaining your regular minimum payments on the lower card. When you’ve paid off the first card, start applying the $175 to the second, plus the minimum payment you had been making on the first. If you were to follow this plan, you could pay off BOTH cards in just over 4 years. Much better than 23 years! Plus, just imagine the amount of money you’ll be saving in interest payments…

As you can see, a Portland mortgage refinance can help you a lot in the short term, but now you can see how much it can have an impact on your long-term financial health as well.