All about your money

Home Refinance For Frugal People

If you are very disciplined with your money I am going to show you a way where you can increase your current cash flow and still pay off your mortgage in the same amount of time. 

If you have looked over this site you will see that we are very conservative when it comes to managing your finances. Our general philosophy is live within your means. My goal for you is still for you to have your house paid off and be debt free. I am going to give you an alternative strategy to do this.

Again, if you are not disciplined with your finances I highly suggest you stick with your current mortgage.

Why would you want to do this? Good question. Here are three plausible scenarios why you might want to consider this approach.

1. You are concerned about being able to make your mortgage payment should you get into a long period of unemployment.
2. You need to buy a new vehicle but do not want to increase your expenses.
3. You were planning on moving in the next few years but with the housing market the way that it is you realize you may have a hard time selling your current property and there is not way you have the cash flow to cover two mortgages

Let's assume that you did a refinance five years ago. At the time your goal was to pay your house off in 15 years. You refinanced $135,000 at 6.5%. Your monthly P&I is $1176.00 a month. As of January 1st 2008 you will owe $95,308 on your home. You final payment is due on 12/1/2016. You would like to payoff your home on or around this date. But, you would like the added piece of mind of reducing your current expenses. 

If we refinance $96,000 on a 30 year note at the same interest rate our monthly P&I is roughtly $607.00 a month. This gives us an extra $569.00 a month in cash flow. But keep in mind our goal is to payoff the house in the same timeframe. What we are going to do is take that $569.00 and apply it to the principle. By doing this we actually end up paying the house off in the same amount of time. 
Excel Spreadsheet: Mortgage Scenario to Reduce Expenses

If you are very disciplined with your finance you must admit this is something to consider. If you are not disciplined with your money I would say click to another page and do not consider this at all. You can download the spreadsheet above and modify it to see if this scenario fits your current situation.