Homeowners: What To Do Before Interest Rates Start Rising
For most of the 21st century, interest rates have been below 10 percent. Mortgage rates can hover between three and six percent, depending on your credit. In economics, however, interest rates will always move either up or down at some point. Interest rates are bound to head upward in the coming year, so it's important for homeowners to make their financial moves now. Consider what you should do before interest rates start rising.
1. Refinance Your Dream Home
If you've already purchased your dream home, rising interest rates may seem like a moot point. However, it's important to keep up with the latest housing news because it can benefit you.
You may have a high-interest rate attached to your property. Credit terms might have been poor in the past, and your credit score has now improved. If rates are rising in the future, they're probably at a low point now. In fact, they might be lower than your current rate.
Consider a refinancing strategy now to lock in a low rate. The mortgage essentially resets at the lower rate, and you don't have to worry about rising interest in the near future. In the end, you might keep this new mortgage for the rest of the financing period.
2. Reconsider Your Current Property
Many homeowners settled for a property at closing time so that they could just get their feet in the door. Homeownership is a complex goal that's hard-fought-for some people. This purchasing strategy is certainly valid, but rising interest rates should get you thinking on a deeper level. If you've considered selling, it's time to make the leap. Both buyers and sellers can be motivated to move properties without too many stipulations.
Your current home may be too small or large, for instance. Its location might not work for your needs anymore. Take all of these factors into consideration. If you don't feel like the home would work for you in the next decade, it's a good idea to sell now with low-interest rates.
3. Convert Any HELOCs
HELOCs or home equity lines of credit are smart ways to access your equity without taking out a lump sum. However, they're usually connected to adjustable rates linked to the nation's prime rate. Rising interest rates translate into a line of credit that may not be affordable anymore.
Think about converting the HELOC to a fixed-rate, equity loan. Many banks offer this transaction so that their customers can pay off the line without defaulting under rising interest rates. Homeowners must lock in a low rate before the interest rises, however. Keep up with the economic news so that you can time any transactions with plenty of space for processing, credit checks, and other logistics.
If you have any questions about mortgages and interest rates in general, speaking to real estate companies in Long Beach is an intelligent way to plan for the future. Make the most out of your investment by locking in the lowest rate now. You can have financial security as a result of your efforts.