Dallas Refinance Guide

Getting a Dallas refinance is a great way to reduce your monthly cash out-flow. By paying less on your mortgage each month, you’ll have a bit more money at the end of the month. It’s easy for this extra money to seem to simply disappear into your regular, daily living 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 does not take a whole lot of money every month to be able to impact your financial future in a very positive way. 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 off (or down) other debt that you have at a higher cost, such as credit cards

2. Put it towards paying down the principle faster on your remaining mortgage

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

If you do have other debts (like most people) such as several credit cards or maybe a car loan, it is important for you to compare the costs (i.e. interest rates), balances and mandatory minimum payments to one another. 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 at 12%, and a Car Loan for $21,000 at 4%. Let’s also say that through your mortgage refinance you’ve been able to gain a savings of $175 per month.

If you were making just above the minimum payments on your 2 credit cards, it would take you 23 years to pay them off (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 apply that $175 towards your credit card balances, this is the suggested approach:

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. If you were to follow this plan, you could pay off BOTH cards in just over 4 years. That’s a whole lot less than twenty-three! Consider how much money you’ll be saving in interest payments over those 19 years…

So as you see, refinancing can make a lot of sense for your short term needs, but can also impact your long term financial goals as well.