Philadelphia Mortgage Stars

Everywhere you turn you can read about the fact that Philadelphia mortgage rates are at historic lows and that now is a great time to refinance. And with all the effort that has gone into creating programs to try to help struggling homeowners, even if you think you aren’t able qualify for a Philadelphia refinance right at this moment, it would be worth calling and talking to a mortgage professional just to be sure. 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.

After you’ve figured out that it makes sense for you to refinance of your existing Philadelphia home loan, the next thing you might want to consider is what to do with the money you’ll be saving. That may sound like a silly question, but trust me, if you’re not careful it is very easy for that extra money to just ‘evaporate’ at the end of each month and not really have much impact on your situation.

In previous articles two different suggestions were made for what someone might want to do with their new found savings. In each example we used the hypothetical number of $175 in monthly savings from your new, lower rate Philadelphia home loan. While that much money is nothing to sneeze at, it’s probably not going to get many people overly excited either. However, we showed how a bit of discipline could turn that modest amount of money into some serious benefits.

In our first example applied the money to pay off existing credit card debts. For our example we used two cards with interest rates of 12% and 16% carrying balances of $4000 and $8000 respectively. In that example we applied the $175 per month to the minimum payments and reduced the pay back period from 23 years to just over 4 years.

In the next example we illustrated how you could pay off your Philadelphia mortgage faster by applying the extra money to the principle each month. Our example used a fixed rate of 5% for 30 years on a $225,000 loan. By applying our extra cash to the principle each month, we reduced the time to pay off the mortgage by over 7 years. Those 7 years of not paying on the mortgage equates to a savings of over $58,000.

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. No matter what your motivation is behind your investing, we just want you to be aware of what potential exists for you with this ‘small’ amount of extra cash you now have.

We’ll need to use some ‘guesstimates’ in this calculation, but we’ll use conservative numbers to be on the safe side.

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 (working on a college fund for a new baby). For our conservative average annual return we’re going to use a rate of 7%.

At the end of 18 years you would have accumulated over $83,000! That’s a pretty good start for college, I would say.

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. By the time you turn 65, if you had done nothing else for your retirement, this account alone would have over $300,000 in it. Again, not too bad.

Of course these are very ‘rough’, hypothetical numbers. However, if they whet your appetite at all, you should definitely consider sitting down with not only a professional mortgage advisor to see about refinancing your Philadelphia home loan, but also with a financial planner and/or an accountant.

In the end though, it is worth understanding that even things that may initially appear like ‘small change’ can have a big impact on your long term financial goals. The mortgage on your Philadelphia home loan is really just a part of your bigger, overall long term financial plan.

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