Rising Interest Rates and Home Buying: How to Stay Ahead of the Curve

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Are you planning to buy a home in the near future? If so, you should be aware of the impact of rising interest rates on your mortgage payments. As the Federal Reserve considers raising interest rates, homebuyers need to be informed and prepared to navigate this changing landscape.


In this article, we'll discuss the basics of interest rates, how they affect your mortgage payments, and what you can do to stay ahead of the curve.


What are interest rates?


Interest rates are the cost of borrowing money from a lender. When you take out a loan, such as a mortgage, you pay interest on the amount you borrow. Interest rates are determined by a variety of factors, including inflation, the economy, and government policies.


How do interest rates affect your mortgage payments?


When interest rates rise, it becomes more expensive to borrow money. This means that the cost of your mortgage payments will also increase. For example, a $200,000 30-year fixed-rate mortgage at 3% interest would have a monthly payment of $843. If the interest rate increased to 4%, the monthly payment would increase to $955.


What can you do to stay ahead of the curve?


Start by getting pre-approved for a mortgage

If you're planning to buy a home, getting pre-approved for a mortgage can help you understand your budget and what you can afford. It can also give you an idea of what your monthly payments might look like based on current interest rates.


Consider a fixed-rate mortgage

If interest rates are expected to rise, consider a fixed-rate mortgage instead of an adjustable-rate mortgage. Fixed-rate mortgages have a set interest rate for the life of the loan, so you don't have to worry about your monthly payments increasing.


Pay down debt and improve your credit score

Having a lower debt-to-income ratio and a higher credit score can help you qualify for a lower interest rate on your mortgage. Consider paying down your debts and making on-time payments to boost your credit score.


Shop around for the best rates

Don't just settle for the first mortgage offer you receive. Shop around and compare rates from different lenders to find the best deal for your budget and needs.


Rising interest rates can have a significant impact on your mortgage payments, but by being informed and prepared, you can stay ahead of the curve. Start by getting pre-approved for a mortgage, consider a fixed-rate mortgage, improve your credit score, and shop around for the best rates. By taking these steps, you can make the home buying process a little less stressful and more affordable.


Contact Suhail for more information about buying or selling a home in Ottawa:


Start your free home search with proprietary MLS access: www.myhomeottawa.com

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Contact us by email at suhail@myhomeottawa.com

Call or text Suhail directly at 613.706.0306


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