3 Tips for Combating Rising Interest Rates

Three methods to consider that will help you combat higher rates.

How can we combat rising interest rates? Everybody wants to get a better deal in today’s market, so here are three ways to fight back against higher rates:

1. An adjustable-rate mortgage. Consider an ARM, instead of a 30-year fixed interest rate. You would have a fixed interest rate for about five years to seven years, and then it would float after that. ARMs are great for people who are only expecting to be in their home for up to 10 years. Right now, the 30-year fixed rate, according to Freddie Mac, is right about 5.5%, and a five-year ARM is 4.35%. If you’re borrowing several hundred thousand dollars, that will save you hundreds of dollars per month.

“ARMs are great for those who expect to be
in their homes for 10 years or fewer.”

2. Do a rate buy-down. If your rate is 5.5%, you could pay to buy a lower rate. Many sellers are offering credits towards interest rate buydowns right now. We can also negotiate that upfront or even during inspections. We can do a calculation to see what the bought-down rate will be and what the change to your monthly payment would be and see exactly how long that payback period would be to see if it makes sense to do that.

3. Put more money down. Last year, when rates were around 3%, I had a lot of people who could buy with cash but got a loan just because money was so cheap. Now you might want to consider, if you have the money, putting more down to keep your interest payments considerably lower.

If there’s anything I could do to help, please don’t hesitate to reach out to me by phone or email. And I look forward to hearing from you.