Portland Home Mortgage Guide

There’s no doubt that you’re aware of today’s low Portland mortgage rates and considered refinancing your home loan to save yourself some money. The tendency of course, is to look at how much you’ll save every month and simply be happy with that. 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. It will involve some discipline on your part, however, hopefully when you realize what the long term effect can be, that it will inspire you to make the necessary effort.

For the sake of argument, and because it was used in a previous example, we’re going to make the assumption that you have decided to refinance your Portland home onto a new, fixed rate 30 year mortgage. Whatever it was you were paying before, now you’re paying $175 per month less. This is a reasonable amount of money, but it’s no ‘lotto’ right? Well 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. 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.

Another smart application of that money would be to apply it towards your existing Portland mortgage to help pay down the principle faster. If you were to do this you could dramatically shorten the amount of time it takes you to pay off your mortgage and again, save you an awful lot of money. How much could you 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. Let’s say you have a fixed rate of 5% on a 30 year mortgage for $225,000. Now let’s imagine that you applied that $175 every month towards the principle on the loan (above and beyond your regularly scheduled mortgage payment), 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’s not chump change…

So, the idea of refinancing to a lower rate is very appealing for many people. The thing that often gets overlooked in favor of short-term rewards is the significant impact a small change to your Portland mortgage rates can make on your long term financial situation. And considering the economic situation we’re in right now, doing a little long-term planning might not be such a bad thing.

No matter whether you’re looking at a Portland refinance or if you’re considering getting a purchase money loan, do your best to look at the power of small but consistent efforts and how it can impact your overall financial picture.