How To Get 2 Months No Bills When You Refinance
One of the great benefits of refinancing your mortgage is the fact that you will get at least one month of no mortgage payment (and no payments on anything else you paid off). And depending on date of your closing, you may even get 2 months of no bills.
So think of that for a minute. Think about how much money you could save if you didn’t have any bills for 2 months. It could be hundreds of dollars and very likely it would actually be in the thousands of dollars.
If you are thinking of refinancing your mortgage, then you obviously will not know the exact amount of your new monthly payments. But you can still get an idea of how much you can save in two months and then every month after.
Right now I’m going run through an example so you can get a better idea on your situation. For this example, I’m going to use the following guidelines….
Mortgage loan amount of $200,000 (house is worth $315,000)
30 year mortgage
8% interest rate
Which is $1,468 per month (principle and interest)
I’m also going to use a credit card debt amount of $15,000 which is $275 per month and a car loan of $18,000 which is $356 per month.
So in this example the monthly amounts are $1468, $275, and $356 for a grand total of $2,099 per month.
Now let’s say this person refinances their mortgage. Their new loan amount is going to be higher since they are paying off their $15,000 credit card debt and $18,000 car loan. But, they will now own their car free and clear and no longer have any credit card debt. Getting rid of that credit card debt will help increase their credit score.
Before stating the new loan amount, don’t forget there are also closing costs involved in a refinance. There is no set closing costs, so for this example I’ll just use an even $10,000. So considering everything, the new loan amount is now $243,000. Interest rate is now going to be 6.25% and it’s still a 30 year term. Given those new numbers, the new monthly mortgage payment is $1,496.
Yes, it is slightly higher than the old mortgage payment. But, don’t forget there is no longer a $275 monthly credit card payment and no longer a $356 monthly car payment. Remember, the TOTAL monthly payments before were $2,099. And now it’s $1,496. Which is $603 LESS than before.
Here is a breakdown of the benefits of this refinance scenario…
Saving $603 each and every month
Interest is tax deductible (**consult an accountant)
Car is now owned free and clear
No more credit card debt
Credit score will increase
Lower interest rate
And if all of that wasn’t enough, two months without any mortgage, car, or credit card payment will put an additional $4,198 into your pocket! To some people that’s an extra months pay, if not more.
As you can see, refinancing your home mortgage can be a very smart thing to do.
Philadelphia Home Mortgage – More great information like this can be found at http://www.Philadelphia-Home-Mortgage.com
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