One of the most important and daunting financial decisions in life is the mortgage. Buying a home can alter the trajectory of you and your family’s life, but not every factor that affects your mortgage is entirely within your control. Rising interest rates, property taxes, and insurance can all cause your mortgage payments to increase, and put you in a tight financial spot.
Not to worry: Equity Bank is here to help you decipher all the confusing information around mortgages, and offer helpful hints along the way. We will cover the basics, including ways to counteract rising rates, what could be causing your mortgage to rise, and what to do if you find yourself in a home you can’t afford.
Rising Rates
For those with fixed mortgage rates, or those who refinanced during 2020 when the rates were extremely low, the market fluctuations over the past year mean very little. However, those with adjustable rate mortgages may be wondering if they’ve made the correct decision on their home.
While interest rates are rising, it is generally inadvisable to refinance your home, even if you are feeling the squeeze from market fluctuations. If you planned to move, you may be stuck for the time being, but watch for falling rates and price drops on homes as people look to downsize or move elsewhere.
Popular areas may see a stagnation in home price hikes as interest rates climb, so consider what the potential difference may be between the current and potential future home value in cities you’re keen on. You may actually benefit from the rate hikes by being able to lock in a home price at a significant discount and refinancing later when rates start to drop.
Equity Bank offers many different products for current and prospective homeowners, including HELOC loans. Reach out today if you’re considering purchasing or refinancing a home.
Escrow Payments
If you’ve locked in a favorable rate, but your mortgage payments are still increasing, you need to take a look at your escrow payments to see where the damage is coming from.
In the case of your mortgage increase stemming from higher property taxes, it’s generally advisable to have the county assessor do an assessment of your property, and to walk them around to ensure they see every detail of your property. In most cases, if you haven’t made additions to your property, you will find some deterioration in one form or another, and this can help you marginally lower your property tax rate.
If the increase is a result of higher insurance premiums, then it’s time to shop around. Insurance carriers will assess your current mortgage and, if you’re in a favorable position, sometimes offer you a better rate than your current company. You can either switch it up, or use this as a tool to negotiate a better rate with your current carrier.
I Feel Stuck
With the economic turmoil over the past few years, many homeowners have experienced the same thing. You’re not alone. With the help of a trusted financial partner, you can actually get back on your feet in a relatively short period of time. It all depends on your circumstances.
Paying Too Much Per Month
You could have been approved for a loan without realizing how much your other expenditures would set you back, and now you’re having to borrow money or dip into your savings to make your mortgage payments. You should consider refinancing your home or selling it, but be aware that if you have limited equity in your home, you could walk away with nothing.
To avoid this, make use of tools like online mortgage calculators or the Equity Bank online budgeting tools. They can help you plan for a realistic budget and ensure you’re making the most of your monthly income.
About to Miss a Payment
A worst case scenario. You are about to be late on a payment, and are in danger of foreclosure. In the event of short-term financial hardship, such as losing your job or an injury, your first option should be to speak to your loan provider about forbearance or a loan modification. If the conditions are right, they may provide you temporary or permanent adjustments to your payments, and allow you to get back on track.
For Sale By Owner – FSBO
If your financial situation is dire, you may want to consider selling your home yourself, which will save you the percentage you’d normally pay to a realtor. Be aware, though, that an FSBO makes you liable for showing the property to potential buyers and submitting all the necessary paperwork through government channels, which can be a hassle.
With luck, your situation is not that dire, and you are carefully considering more practical options for you and your family.
We Can Help
Choosing the right home and the right mortgage is essential to building wealth and finding stability for you and your family. If you are wondering about options for buying or refinancing a home, visit your local Equity Bank branch or contact us today to see what we can do to help you transform a house into your home.