Dallas Refinance Guide

You’ve no doubt read many times in many different places that refinancing your Dallas mortgage at today’s low mortgage rates could possibly save you a lot of money. It’s very typical to look at your existing interest rate, compare it to the new rates, and be happy calculating the extra cash you’ll have every month with a new mortgage. 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 is true that it will require some financial discipline from you, however, the hope is that when you see what kind of impact this can have on you and your family’s long-term financial future, you’ll be inspired to make the effort and even take pleasure in it.

Let’s run some numbers based on an assumption that your new Dallas mortgage will be a fixed rate mortgage on a 30 year term. Also for the sake of argument, we’ll say the new mortgage is saving you a total of $175 each month. A bit less than $200 is a nice addition each month, but nothing to get overly excited about, right? Well, it depends… 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…. On the other hand, if you were to use your monthly savings to pay those debts, you could reduce the total pay-back period from 23 years to about 4 years, saving you a LOT of money.

A second option for your savings could be to apply them to your existing Dallas mortgage every month to help pay down your principle faster. By doing so, you could shorten the length of time it takes to pay it off and save you a whole lot of money. How much? Let’s take a look at some numbers.

We need some specific numbers to work with, so let’s go with the following 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 kind of money is something to get excited and motivated by!

So, the idea of refinancing to a lower rate is very appealing for many people. However, the thing that often gets overlooked is how significant a difference a small change in your Dallas mortgage rates can have on your long term net worth. As we’ve all seen in the current economic situation we find ourselves in, a bit of us.

No matter whether you’re looking at a Dallas refinance or you’re looking to make a purchase, it’s worthwhile to take a moment to realize what small but regular efforts can make on the big picture of your financial situation.