Baltimore Refinance Guide

Everywhere you turn you can read about the fact that Baltimore 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, it would be worth talking to your mortgage lender even if you think you might not be in a position for a Baltimore refinance right now. You never know, one of these programs might be just the thing for your existing situation.

Once you’ve established that you can do a Baltimore refinance, and that it makes sense for you to do so right now, the next question will be; what to do with the savings you’ll be getting. While that might sound ridiculous, if you don’t make a plan for what to do with that extra cash, it will just ‘disappear’ into your day to day expenses and will never have the kind of impact on your life that it could.

In previous articles two different suggestions were made for what someone might want to do with their new found savings. In all examples we used a hypothetical monthly savings of $175 with your new mortgage. While that amount of savings is pretty good, it’s probably not enough to make many people overly excited. However, with a bit of disciplined effort applied to that money, we showed how it could turn into something that you can excited about.

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 example number 2 we took the savings and applied it towards the principle on your Baltimore mortgage to help pay it off more quickly. Our example used a fixed rate of 5% for 30 years on a $225,000 loan. When we applied the $175 per month savings to the principle, we shaved over seven years off the mortgage and paid it off in just under 23 years rather than 30. What does that add up to for you? Over $58,000 in savings.

Our third option would be for you to invest that money each month. The investment goals could be anything from your retirement to a vacation to a child or grand child’s college expenses. The reason is totally up to you, we just want to show you what you might be able to accomplish with this ‘modest’ monthly contribution.

In trying to predict what kind of return you might get from an investment, we have to make some guesses. We’ll use conservative numbers to be safe.

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). We’re going to use a conservative annual rate of return of 7% for this example.

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

Now let’s look at a different person; a 30 year old who has plans to retire when they turn 65. Let’s also say that this account is starting with ZERO balance, but gets the $175 every month, compounding at a conservative rate of 7% annually. Given this situation, if you did nothing else for your retirement, by the time you were 65 years old this account would have over $300,000 in it. Again, not too bad.

You need to remember of course that these figures are all hypothetical. If these numbers have got you thinking though, you really owe it to yourself to discuss it in more detail with a Baltimore mortgage lender as well as an accountant and/or a financial planner.

The main take-away here is that while savings may seem like ‘small change’ at first, if you can be disciplined enough to apply those savings to a PLAN, you can have a major impact on your overall financial picture. The mortgage on your Baltimore home loan is really just a part of your bigger, overall long term financial plan.

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