Want to protect yourself from rising interest rates? Here is a strategy some of my borrowers have used.

With multiple Federal Reserve rate hikes this year and with more likely to come many Americans are understandably worried about what rising interest rates will do to their finances.

A Rise in the discount rate will make it more expensive to finance a home, car or almost any other product & will cause existing debt that is not fixed such as most Credit Cards & Home Equity Lines of Credit to have a higher rate.?

The discount rate is the interest rate charged to commercial banks and other financial institutions for short-term loans they take from the Federal Reserve Bank. (Investopedia).?

For many that are just getting by month to month a rate increase on their lines of credit be it Credit Cards or Home Equity Lines can put them in a spot where they can no longer keep up with their payments.?

Some may benefit from accessing their home’s equity by doing a Cash-Out Refinance consolidating their high interest and variable debt given the increase in home values the country has experienced. Why could this be a good strategy??

Lower Rates-

A mortgage is almost always your least expensive money given that it is securitized by your home.

Fixed Rates

Locking in a fixed rate before rates start to normalize means you can pay todays rates for the life of your loan.

Term

You could go to a longer term and make your monthly payments a lot less of a burden or go shorter and get out of debt sooner.

Credit score

Utilizing most of your available revolving debt can be a drag on your score. By paying some or all of it off you have the potential to maximize your score.?

What about you have you consolidated some of your variable and high interest debt into a mortgage while rates are still low??

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Benjamin Kell NMLS 2126313