Things You Can Do To Be Ready When Interest Rates Rise

Although mortgage interest rates have been at historic lows for some time now, analysts predict that they'll rise in the next few years. Refinancing your home or upsizing or downsizing may be one of the things you should do in anticipation of higher mortgage interest rates.

If you've occupied your current home for several years, you may be able to refinance it at a much lower rate. Additionally, if your personal circumstances have changed since you bought it, you may be able to save even more by moving to a smaller home. If a larger home is what you need, you may be able to afford substantially more home now than a few years ago.

Small Rate Increases Matter

Although a minuscule rise in interest rates may seem rather inconsequential, it can make a big difference in your mortgage payments over time. Consider the following chart:

Mortgage $300,000 $292,500 $285,000 $277,500 $270,000
4.0%         $1,432      $1396       $1,361      $1325      $1,289
3.75%       $1,389      $1,355      $1,320      $1,285     $1,250
3.50%       $1,347      $1,313       $1,280     $1,246      $1,212
3.25%       $1,306      $1,273       $1,240     $1,208      $1,175
3.0%         $1,265      $1,233       $1,202     $1,170       $1,138
2.75%       $1.225      $1,194       $1,163      $1,133       $1,102

So if you have a $300,000 mortgage, the payment difference between a 4% mortgage and a 2.75% mortgage is several hundred dollars, which adds exponentially to the overall cost of the home for the duration of the mortgage.

This means you'll spend considerably more for less home if you wait until rates go up. If you now work from home – a more common scenario than just a few years ago – you may need more home so that you can have a dedicated office. If you spend less time at home, you may need less home, so you'll spend less and see even larger savings.

If finances are tight, this may be an even better time to refinance and reduce your monthly outgo.

If your neighborhood no longer meets your needs, this is an ideal time to relocate to a different area that's better suited to your current lifestyle and needs.

Rates By Decade

Current mortgage interest rates are lower than they have been in decades, according to the following interest rate statistics:
The 1970s were 8.86%
The 1980s were 12.70%
The 1990s were 8.12%
The 2000s were 6.029%
The 2010s were 4.09%
Current is less than 3%

What To Do

If you have a higher-rate mortgage, now is definitely the time to consider refinancing or purchasing a home that's better suited to your needs. Although it's possible that rates will go down further, analysts don't predict that to happen. Even a small increase can make a big difference in your mortgage outgo, so consider contacting one of the real estate companies in Dallas TX. If you live in the area or are considering moving there, prices are increasing and supply is decreasing, so now's the best time to call one of the real estate companies in Dallas TX, and get started on your new home search. They can help you list your current home as well, so give them a call today. Don't wait and miss out on your ideal home at an ideal interest rate.