Your House, Opportunities, and interest rates.

Currently, mortgage rates are near 4%, which is still very low by historical standards. However, the Federal Reserve has hinted that it could raise interest rates soon. How does this affect a HELOC or Home Equity loan? What should you do if you are thinking about refinancing or taking out a home mortgage? In this article, we’ll present a few ideas to consider. If you have more questions, feel free to give us a call at 1-800-464-0253.

cPort member homeowners often look to a home equity loan when extra money is needed. Funds might be needed for home improvements, consolidating debt, or subsidizing school tuition costs. Financial institutions will use a person’s home as collateral, with lower interest rates. The member will borrow a lump sum that is determined at the time of approval. This loan has a fixed interest rate for the life of the repayment period. The rate is locked in at the beginning of the loan and will never change during that period, no matter what the Federal Reserve decides to do.

For the same reasons as the home equity loan, members also opt for a HELOC (Home Equity Line of Credit). What’s the difference? Instead of receiving a lump sum, the member can borrow against a line of credit and withdraw up to a certain amount whenever cash is needed. It works similarly to a credit card. Instead of a fixed rate like a home equity loan, a HELOC often uses a variable rate for the life of the loan. If the Fed decides to raise the interest rates, then your loan rate will likely change along with it.

If you are thinking of getting a home mortgage, now is a good time to lock in a low, fixed-rate mortgage. Conversely, if you already have a mortgage, consider refinancing. For current Adjustable Rate Mortgage borrowers who plan on staying in their homes for at least five years, refinancing into a fixed-rate mortgage could save you money down the road.

If you have questions about your home mortgage or are interested in a home equity loan a line of credit, or refinancing, give us a call at 1-800-464-0253. A cPort Member Care specialist will be happy to assist you.