What Do I Do if My Interest Rate Has Gone Up?

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What Do I Do if My Interest Rate Has Gone Up?
The housing market is fickle. Rates can change at
the drop of a hat, and theres no guarantee of
anything staying the same for any length of time.
What seemed like a great idea originally can
turn sour within a few years with bad luck, so
what can be done when that interest rate goes
up? Homebuyers can buy their interest rate down
with what they call points. Some lenders are
offering to buy down interest rates to last
years level for the first year or two. Other
options for lowing interest rates include
refinancing, making larger payments, and renting
out part of the property. Keep reading to find
out what to do about interest going up, what can
be done about it, and how Buyers Slice Realty
can help.
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Why Do Interest Rates Go Up? The housing market
has very few guarantees. Unless a homebuyer has
stellar credit and happen to get in on low fixed
rates, those mortgage interest rates are going to
shift based on current market trends and
inflation. That means that eventually, payments
might get to a point where they become difficult
to pay. This leads to homeowners looking for ways
to lower these rates to something more
feasible. Using Points to Lower Your Mortgage
Interest Rate Buying down a mortgage interest
rate is a common practice and typically comes in
the form of points. These points need to be
purchased upfront but can help to lower the
interest rate to what it was the year before.
This is extremely useful if the market has
suddenly shifted and has caused the rates to
shift on existing mortgages. Typically, points
are expected to cost about 1 of the overall loan
and allow for the rate to be lowered by
approximately .25 per purchased point. It is
important to note that each lender has their own
pricing and policies regarding this method, so be
sure to check in with them on the exact
rate. Consider Refinancing for Older
Mortgages What was a good or necessary deal back
when purchasing a home doesnt always continue
to be as time goes on. If the rate wasnt fixed,
it can start to get difficult to pay as that
interest rate increases. Buying down the rate
stops being an option after a few years, but
there is still hope. Refinancing allows a
home-buying mortgage rate adjustment and can
result in significant savings. It does come with
a new, upfront closing cost of 1-1.5 of the new
loan amount but might be a good idea if credit
has improved enough to qualify for better rates.
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Make Larger Payments If possible, making larger
payments is a great way to lower the remaining
amount of the loan, which in turn helps to
reduce interest. Many homebuyers opt to only ever
paying the minimum, exact payments that appear
on their monthly statements. Its convenient and
what is due. However, it is completely acceptable
to make larger payments if its feasible to in
order to drive down the interest and finish
payments sooner. Just be sure to check for any
clauses that penalize early repayment! Rent Out
Part of the Property Renting out part or all of
the property is a viable method of gaining
passive income that can be used to pay on a
mortgage. That can be as simple as renting out a
room, a spare building, or even part of the
lawn. Theres also the option to become a
landlord entirely and rent out the whole
property, as long as there wasnt any agreement
otherwise. Usually, renting out part of the
property is fine, but some mortgages have clauses
for turning properties into rental units, so be
sure to look over everything before diving in.
Dont be afraid to ask for help double-checking
and getting the legalities out of the
way. Conclusion The world of homebuying is
difficult no matter how its sliced. Mortgage
rates increase and decrease at the drop of a hat
and can end up causing issues with repayment.
Thankfully, if the interest rate has increased,
there are some things that can be done to help
ease the blow a bit. This includes buying down
the rate with points, refinancing, renting out,
and making larger payments if possible. Be sure
to get help from professionals such as those at
Buyers Slice Realty to make sure that everything
is done properly and the best rate is procured.
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Buyers Slice Realty is Here to Help There is
nobody like Buyers Slice Realty when home buying
in Colorado. Buyers Slice cuts out the
middleman by letting buyers find what they want
to look at themselves and then help them make
the offer, do the paperwork, and close the deal.
Commission earned is then split with the buyer
at closing to leave more money in their pocket
and get them into the home of their
dreams. Ready to save big? Contact Buyers Slice
Realty to learn more!