# Refinance Your Mortgage To Save Big Time in the Long-Run

As it has been discussed at length in many different places, refinancing your mortgage today can potentially save you a lot of money. The tendency of course, is to look at how much you’ll save every month and simply be happy with that. The problem is that more often than not, that extra money you gain doesn’t really seem to DO anything for you. It is so easy for it to simply evaporate into your everyday expenses. This article will describe the true potential power of those savings to you. It will involve some discipline on your part, but the hope is that when you see what the outcome could be, you’ll find it to be worth your while.

For the sake of argument, and because it was used in a previous example, we’re going to make the assumption that you have decided to refinance your home onto a new, fixed rate 30 year mortgage. Whatever it was you were paying before, now you’re paying \$175 per month less. A good amount of extra money to have every month, but what are you going to do with it?

In our previous example we talked about paying off other debts, such as credit cards. In that example we imagined that you had 2 cards, one with a balance of \$4000 at 16% interest rate and another with an \$8,000 balance at 12%. We showed that if you had been making just above the minimum monthly payments before, the pay-off would take 23 years. If you now started using your extra monthly savings from your refinance, you could shorten the payback period to about 4 years.

Another option for the money would be to apply it towards the principle on your new mortgage. 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.

by L'Enfant Terrible

Again, for the sake of argument, we’ll use the following example. Let’s say your mortgage is for \$225,000 at a rate of 5% for 360 months (30 years). If you were to apply that \$175 savings each and every month towards the principle balance, you would be able to pay off your loan over 7 years early saving more than \$58,000 in interest payments! That’s not chump change…

So, the idea of refinancing to a lower rate is very appealing for many people. What sometimes gets overlooked is the true power of what a little financial discipline can do for your long-term financial picture. And considering the economic situation we’re in right now, doing a little long-term planning might not be such a bad thing.

You can find more articles about both mortgage refinancing as well as information for people looking at getting a Portland mortgage for the first time by visiting Portland Refinance Help.