Are you ready for higher interest rates? Remember, interest is the portion of a loan paid by a borrower to a lender to compensate the lender for lending the money in the first place. In essence, interest is “the cost of money.” The big question is how does a borrower prepare for rising interest rates?
For the last decade, borrowers and buyers have enjoyed historically low interest rates but the days of the sub-1% overnight rate has ended and now the bank-lending prime is heading closer to 4%, eventually 5% and perhaps even 6%.
Now, with mortgage rates on the rise, it’s probably a good time to learn (or refresh) a few strategies to minimize the impact of rising rates. Here are six strategies to reduce the impact of rising interest rates and prepare yourself as a homebuyer.