NEW YORK – March 31, 2022 – (
To combat the recent surge in inflation, the Federal Reserve introduced its first rate hike in 3 years on March 17, 2022 and is expected to raise interest rates up to six times in 2022. Although this may help reduce pressure from rising prices and stabilizing the economy in the long term, it would also mean that expenses that require a loan will cost more next year than they cost now.
Here are five things you should consider taking advantage of now before interest rates continue to rise.
1. Refinance your mortgage
If you haven’t already, it might be time to review your home loan. Since the start of the pandemic, mortgage rates have been incredibly low, which has allowed many homeowners to potentially reduce their monthly payment by a hundred dollars.
For example, let’s say you have a 30-year fixed mortgage for $200,000 with an APY of 4.5%. In this scenario, your monthly principal and interest would be $1,013. However, if you were to switch to a 3.5% APY, your payment would drop to $898, saving you $115 per month.
2. Refinance your student loans
Just like your mortgage, if you haven’t refinanced your student loans in a while, chances are you’re paying too much and could potentially save with a lower rate. Since 2019, rates have come down significantly, creating an opportunity for relief. However, this may change if there are rate increases.
The best place to start is to call your current lender. Ask them what their current rates are and if there are any options for refinance your student loans. As long as your payment history and credit score are good, opportunities should be available.
3. Buy a vehicle
Given recent supply shortages at dealerships, buying a vehicle right now can be somewhat expensive. But if you generally finance your purchase, an increase in interest rates will make you pay even more in the near future.
Buyers who are serious about buying a vehicle should start by getting pre-approved. Once you have completed your application, pre-approval will take approximately 30-60 days depending on the lender. This will help you lock in the interest rate while you take your time finding a good deal.
4. Consolidate your debt
If you have multiple debts at varying interest rates, consider turning them into one manageable payment using debt consolidation. This is where you essentially take out one larger loan to pay off several smaller ones.
Like mortgages and student loans, the rates used for debt consolidation fluctuate with the market. So if you’re considering one, contact potential lenders shortly before rates start to rise.
5. Buy a second property
Have you always dreamed of having a vacation home? Or what about an investment property that you could use to generate rental income? Whatever your motivation, now may be the time to consider taking action.
Typically, interest rates on real estate that isn’t considered your primary residence tend to be 0.50-0.75% higher.
For this reason, if you have any hopes of owning a second property, don’t hesitate. Take advantage of these low rates before the next rate hike.
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Laurel Road: 5 things to consider while interest rates stay low