Mortgage rates were at record lows for quite some time, making it easy for new homebuyers to finance their dream homes. But rates have been increasing over the past couple of years, making mortgages more expensive. So what can you do to prepare yourself when mortgage rates rise?
Here are three strategies that will keep you ahead of the game.
1. Start Saving More Money Now
If you have a variable rate mortgage, you’ve benefitted from great interest rates that this world won’t see again for quite some time. Hopefully, you took advantage of the low-interest period to save up some cash. If so, you’re going to be in a great position for when interest rates rise – and if not, you’ll want to start saving as much as you can now to ensure you can weather the storm.
So start squirreling away as much of your paycheck as you can.
2. Pay Down as Much of Your Principal as Possible
Another great way to prepare for the rise in interest rates is to pay down your principal amount. The total amount of interest you’ll pay goes up when rates go up, but by paying down your principal, you can take a big bite out of your debt before it has a chance to snowball. So pay down as much of your principal as you can afford – it’s easier to pay down interest on a smaller principal amount.
3. Switch to a Fixed Rate Mortgage
One of the best ways to take advantage of low rates and ensure you get a great deal is to switch your floating rate mortgage to a fixed-rate mortgage. Locking in a low interest rate with a fixed-rate mortgage means you’ll pay less interest over the term of the loan, but it also means you’ll only have a set amount of time to pay your mortgage in full. If you’re in a position to predict when you can pay back your mortgage, you’ll save a lot of money by locking in a low rate.
If you’re a homeowner, you’ll want to do everything you can to prepare for higher interest rates.
Looking to Apply For a Mortgage?
Do you have questions about mortgages? Are you considering applying for one soon? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington serving the entire state, as well as Oregon, Idaho, and Colorado. Our experts are on stand-by ready to work with you to help you choose which one of our mortgage programs is best for you, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Contact us today with any questions you have about mortgages.