Do rising interest rates impact your home equity?
If you already own a home, mortgage rate fluctuations won't impact you as much as borrowers applying for a new mortgage. But they can impact your home equity. What's more significant for homeowners shopping for home equity and home equity lines of credit, or HELOCs, is the prime rate -- another baseline rate banks use for lending.
With mortgage rates at more than 6%, a cash-out refinance won't make financial sense for most homeowners who already locked in lower mortgage rates during the pandemic. In a rising interest rate environment, home equity loans can be a good option for financing. You can borrow against your home equity at a relatively low-interest rate, and with a home equity loan, you can lock in a fixed interest rate so you don't have to worry about the Fed's next rate hike.
As a homeowner, keep in mind that although mortgage rates may not directly impact you if you're trying to sell your home, higher rates could limit the number of would-be homebuyers in your local market.
If you’re thinking of converting your residential property into a house for rent, that might be your smartest choice today. Right now, we may be facing an interest rate hike, and this may affect your real estate investments.
Get started with your FREE RENTAL PRICE ANALYSIS.
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