Different Between Interest Rate Vs. Interest Volume
Author : United Financial Freedom | Published On : 16 Sep 2021
With current mortgage interest rates at record highs, it is no surprise that the volume of refinancing loans is increasing significantly. Not only are interest rates at their lowest, the Obama administration has implemented several programs and policies that make refinancing your home even more financially attractive. There has never been a better time in history when refinancing loans have been so financially beneficial for homeowners. If you plan to stay in your current home for at least 3 years, it would be financially prudent to at least consider refinancing your home.
Current mortgage rates are still at historic lows close to 5%, but they won't stay that way forever. Now is the time to act if you want to refinance your home. Many financial experts, including myself, predict that interest rates will rise in 9 months. If you're stuck in an adjustable rate mortgage, your monthly payment will go up dramatically. I think it would be prudent for anyone who currently has an adjustable rate mortgage to switch to a fixed rate and do so relatively quickly, when current mortgage interest rates are at record highs. It is simply too risky to have an adjustable rate in this uncertain economic environment .
Refinancing your home is not for everyone. Generally, if you don't plan to live in your home for at least 3 years, it wouldn't make financial sense for you to refinance. However, current mortgage rates coupled with various government incentives have made this a unique time in history, and refinancing loans are increasing dramatically as more and more people see the benefits that refinancing their homes can bring.
I encourage homeowners who wish to further explore loan refinancing to speak to a mortgage professional. The best way to find refinance specialists is to use a free online service that allows you to complete an application and have 3-4 different lenders in your area. This can discuss your home refinancing options with some professionals and choose the one you feel most comfortable with or who can offer you the best deal. Saving money on your mortgage by refinancing is a very real possibility and I encourage you to discuss your options with a mortgage refinance specialist.Different Between Interest Rate Vs. Interest Volume? we can discuss first interest rate then interest volume.
Interest rates have been very low for many years. There has been talk of an increase in interest rates, as evidenced by the bond market. What do you do with your money if interest rates go up?
There are several aspects of your money to consider when asking this question. The first area is debt. When interest rates rise, the cost of repaying any type of debt will increase on average. The exception may be credit cards, but the rate for this type of debt is too high to begin with. If you have debt, choose debt with a fixed interest rate or a variable interest rate. Fixed rate debts are generally mortgages or loans with a term determined by the debt contract. Variable rate debt would be lines of credit or a variable rate mortgage. Variable rates usually need to be paid first in case the rates go up, as these will be affected as soon as possible. Fixed rates can be kept until renegotiated, but consider how the new rate can be paid when it goes into effect. If these fixed rate loans are years in the future, this consideration can be left up to 1 or 2 years before the current rate expires. The next step is to choose the highest variable rate loans and pay them off first. I would include credit cards on this list because they tend to have the highest rates for most people. If you currently have variable rate loans, you may want to consider locking in a fixed rate for a longer period. If you absolutely need a static payment every month and can't afford a higher interest rate, this option would be a good idea for you.
The next area is your cash investments. Rising interest rates are generally good for savings accounts and GICs, as they would earn more interest. If you have money in a bank account and have no other use for it, you should probably leave it in the bank account or deposit it in a high interest savings account that would bring in more money to the bank. as rates rise. Some bank accounts don't pay a lot of interest, and it will likely stay the same even if rates start to rise. If you have fixed term GICs, you will usually have to wait until they expire before reinvesting the money. You are likely to get a higher rate at that time if the rates have increased since the due date. If you have GICs that are not locked in or can be redeemed at any time, you may want to redeem them when you see the posted rates that are higher than the rate you are currently getting. When you renew this type of GIC, make sure that the new investment is still collectible and that the holding period is short before collecting. During periods of rising interest rates, you may need to keep renewing these types of GICs as rates rise to take advantage of the higher rates. This process is generally free and carries no additional risk. Therefore, renewing when interest rates rise is generally a good idea in this situation.
The next area is the fixed income portion of the investment portfolio. Some investments will be more affected than others in the area of ??investment. The first thing to notice is "what is the interest rate going up?" »There is a charge for deposits of 1 day, 1 month, 6 months, 1 year and so on up to 30 years. The Bank of Canada or the US Federal Reserve will announce the overnight lending rate, but other rates are determined by the markets in which they operate. Sometimes overnight interest rates don't change, but longer-term rates can change depending on what the bond market perceives as the direction of the interest rate. This happened recently as the 10-year US bond rate rose, but the overnight rates have not changed. If you have fixed income investments, which include bonds, mortgages, or any type of debt that you receive interest on instead of paying it off, you would be affected by a rate change. This is because the interest rate is the “price” of your investment, and if the rate goes up, the price of the debt security will go down. This translates to “it is cheaper to get the same interest as when the interest rates were lower”. If you hold this investment to maturity, the prices will change, but you will not be affected as you have the individual bond.