Everywhere you turn lately, radio, TV, internet, you see and hear about “Interest Rates on the Rise”, it tends to be quite unsettling to those in the market for a home and those who could benefit from a mortgage refinance. Let’s not forget, higher interest rates do not just apply to mortgage loans, they also can affect credit cards, variable rate debts and car loans to name a few areas.
So, what is the big deal?
Adjustable Rate Mortgage holders have been reaping the benefits of historical low rates, but now that rates are on the rise, those monthly payments will be impacted, putting your budget a bit off center. Now would be an opportunity to research transferring your adjustable rate mortgage to a fixed rate and term mortgage so you can get that budget back on track.
New Home Owners need to put all the hype into proper perspective. The rate increases from the 3s to 4s are still historically low and the affordability index remains very high. Home Buyers will not be priced out of homeownership overnight and this shouldn’t deter you from pursuing your dreams of homeownership.
Home Sellers may be the immediate winners in this case as there may be a flurry of activity in the housing market due to first time homebuyers wanting to get into a new home before rates potentially go higher.
Refinancing your home could still be worth the efforts if you haven’t already done so. A few percentage points could make a big difference over the long term, therefore, now would be a great time to review your present mortgage and inquire about a refinance rate. As always, refinancing can offer opportunities to shave off a few years of your loan term and/or to consolidate debt from credit cards or student loans with a high interest or variable rate.
The simple truth is and always will be that rates fluctuate. It’s a cycle that has been going on for many years, but keep in mind that the increased rates of today are still lower than previous years. As mentioned above, rising rates could prove to be an opportunity rather than a hindrance.
United Faith Mortgage