If you’re in the market for a new mortgage or already have a mortgage, you may be wondering what the rising interest rates could mean for you. Although the federal interest rates hike doesn’t directly affect mortgage rates, you could end up paying more on your loan in the long-term.
Still confused? The team at Choice Mortgage bank is here to explain it all for you.
What Causes Interest Rates to Rise?
Federal interest rates typically rise when the economy is booming, and when the economy is doing well, people feel much more confident about applying for a loan or taking out a mortgage, for example.
Although there are many upsides to this trend, the housing market may suffer because of it. Buyers are struggling to find housing in a market where inventory is low, and prices are high by historical standards.
How does this Affect Home Mortgage Interest Rates?
From this year onward, mortgage rate interest deductions are capped at $750,000, down from $1 million under the previous tax code. This cap reduction might make homeowners whose mortgage interest exceeds $750,000 less inclined to move, which could also end up reducing the housing inventory in some regions.
Mortgage interest rates may be affected depending on what kind of mortgage you have. If you have an Adjustable-rate Mortgage (ARM) or a HELOC, it is likely that your interest rates will go up.
What Can I Do About Rising Interest Rates?
The first and most important thing to do is pay off your consumer debt. If you don’t have any consumer debt – except for your home – keep on saving. Thanks to rising interest rates, your savings could grow little by little.
As for your mortgage – if you have an adjustable-rate mortgage, consider refinancing to a fixed-rate loan before long-term rates increase.
Get Pre-Approved Today with Choice Mortgage Bank
At Choice Mortgage Bank, we specialize in residential loans and mortgages so we have the expertise necessary to help you obtain the best rates. Contact Emmanuel St. Germain and his team by calling 561-362-8204 or visiting his website here and get pre-approved for a mortgage today!