Philadelphia Mortgage Stars

If you’re looking to save money on your monthly housing expense, refinancing a Philadelphia mortgage is a great way to go about it. Paying less means you have more money in your pocket at the end of the month. This extra money can easily just ‘evaporate’ into your day-to-day living expenses. However, with a little bit of effort, self discipline and a plan, you can make this money go a long way towards improving your overall long term financial position. 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 three primary considerations for how to apply your new found savings to best impact your long term financial goals.

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. Investing the savings to address future goals such as college tuition or retirement

If you are carrying other debt, such as multiple credit cards or auto loans, you should compare everything from the interest rate to the minimum payments necessary to the outstanding balance of each against the other. 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.

Let’s say that you have balances on 3 credit accounts as follows: First Credit Card with $4,000 balance at 16%, Creditcard #3 carries a balance of $8,000 and a 12%, and finally a car payment on a loan of $21,000 at 4%. We’ll also say that you achieved a modest $175 in savings through 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). 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. When that is gone, apply both the $175 and the minimum payment you were making to the first card to the second. 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! Just think of the amount of interest costs you would be saving…

As you can see, a Philadelphia mortgage refinance can help you a lot in the short term, but can also impact your long term financial goals as well.

Comments are closed.