Denver Home Mortgage

As it has been discussed at length in many different places, refinancing your Denver mortgage today can potentially 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. Unfortunately, it is very common for this extra money to never really seem to make it to the point of affecting your life in any real, 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. This article will describe the true potential power of those savings to you. It is true that it will require some financial discipline from you, however, hopefully when you realize what the long term effect can be, that it will inspire you to make the necessary effort.

Let’s run some numbers based on an assumption that your new Denver 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 good amount of extra money to have every month, but what are you going to do with it?

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%. Making the assumption that you were just making the minimum necessary monthly payments (plus a little towards principle), that it would take you about 23 years to pay them both 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 Denver mortgage to help pay down the principle faster. By doing this each month you could reduce 30 years it is scheduled to take to pay off your mortgage and again, save you a lot of money. Are you wondering how much you might save? Let’s take a look.

We need some specific numbers to work with, so let’s go with the following scenario. We’re going to say that your new mortgage is for $225,000 on a 30 year program at a fixed rate of 5%. If you could get yourself to apply that extra $175 you now have each month towards the principle on your new loan, you would be able to pay off the loan in about 23 years rather than 30 which would translate into you saving over $58,000 on the total cost of the loan! That’s not chump change…

It’s obvious that the concept of refinancing to a lower rate is very appealing to a lot of people. What sometimes gets overlooked is the true power of what a little financial discipline can do for your long-term financial picture when applied to your Denver mortgage rates. As we’ve all seen in the current economic situation we find ourselves in, a bit of us.

So whether you’re considering a Denver refinance or if you’re considering getting a purchase money loan, it’s worthwhile to take a moment to realize what small but regular efforts can make on the big picture of your financial situation.

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