Four Moves To Make Before Interest Rates Go Up

Media / Blog

Four Moves To Make Before Interest Rates Go Up

Prev

How To Use LinkedIn To Make More Money

March 03, 2018

It's been roughly a decade since the housing collapse in the United States, and if you haven't checked as of late the homes and buildings are going up in your neighborhood like a 2007 party. Part of the main reason for the boom over the past decade was the loosening of the monetary policy keeping long term borrowing rates next to nothing.

Those of you who locked in 30-year mortgages between 3% and 4% should thank your lucky stars because we may not see those rates again for another 20 years or more. Now that the United States has hit record low unemployment and corporations across America are making record profits, the Fed is now beginning to tighten the monetary policy. Mortgage rates were between 4.5% and 4.6% for a 30 year mortgage during the week of February 25th, 2018 (source: bankrate.com)

So, what four smart money moves can you make as the Fed tightens up the money supply?

  • Cut the ARM off - While most of you have enjoyed super low interest rates with Adjustable Rate Mortgages, now would be a good time to consider locking into a long-term mortgage before rates get too high. If you don't, you could be stuck with an incredibly high interest rate as most ARM's will cap at 2% growth per year and potentially 9% to 10% long term dependent on your mortgage. Also, some of you took out a 5/1 or 7/1 mortgage that will convert to an ARM sometime soon. This means you may want to run the numbers to consider what a refinance to a 30 year mortgage looks like now before the mortgage converts to an adjustable.

  • What type of credit card do you have? - Many of you that have credit card debt that you are financing need to be careful about the rising rates on your card as interest rates hike up. You may only be paying 10% or 12% on your credit card now, but if the rate is not fixed currently that rate could quickly rise to 18% to 20% increasing your monthly payments. You may want to check to see if you can fix the interest rate on your card or consider paying down the variable rate cards before rates rise two to three times here in 2018.

  • The student loans just got worse - For those of you who took out private student loans, you may have chosen a variable rate instead of a fixed rate because at the time interest rates were incredibly low. Now that rates are going up quickly, you might want to look at a website like sofi.com and see if you can lock in a long term interest rate.

  • Lines Of Credit - For business owners, times have also been really good. If you took out a commercial loan on your property, remember that interest rates typically reset every ten years. This means, you may want to pay down your loan or consider what the cost of the loan will be when interest rates reset. More importantly, if you have to renew a line of credit, consider that the renewal rates could be substantially higher and the spread you used to have to borrow money and put it in float might not be as good as it was even five years ago.

If you want to set up a time to discuss specific investments that you should own as interest rates go up, please go to oXYGen Financial to set up an appointment.


If you would like to receive more information on making smart money moves for your future, be sure to contact us today!

Next

What’s Best? Buy, Lease, or Rent A Car

Sign Up

Sign up for our exclusive Sunday Paper with a weekly market commentary, insightful personal finance blogs, and life changing education guides.

Email sign up

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 844-553-7872.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.