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A Common Mortgage Mistake

Mortgage Mistake #4 . Waiting for interest rates to rise before you refinance an adjustable first or second mortgage.

If you follow the economic news at all, I’m sure you’re aware that consumer interest rates have risen sharply over the past few months. Reports indicate that companies are competing for workers so there is upward pressure on wages. Higher wages mean higher inflation and inflation is one of the greatest drivers in rising rates. Over the last 4 months, interest rates have risen approximately ¾%. Our new Federal Reserve Chairman, Jerome Powell gave testimony that indicated we may have 1 or 2 more rate increases before the end of the year.
A couple of questions I have been asked several times over the past few months are, “What should I do about my Adjustable Rate Mortgage?” and “What should I do about my Home Equity line of Credit?” For consumers in adjustable rate loans about to reset or with variable rate credit lines, this can mean a large increase in your monthly payment. You may be able to avoid the increase by refinancing your loan into another adjustable rate loan or a fixed rate loan. With the new tax laws, another factor to consider in 2018 is that interest on Home Equity Loans are no longer tax deductible. Many people are also concerned about the cost of refinancing. In most cases you can add the cost to your new loan and still save money. You also have the option to do a no closing cost refinance by paying a slightly higher interest rate instead. Either way there are many factors that go into making the choice that is right for you. I invite you to call me or one of my experienced associates at Federated Lending at 215-493-1500 x 112 and I will be happy to help.

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