A new way you can manage your financial situation amid high rates.
In recent times, the buzz around interest rates has left many feeling uneasy. The looming specter of high rates can be intimidating, especially when compared to the golden era of remarkably low interest rates – the unicorn years, as some call them. However, before succumbing to financial anxiety, let’s take a closer look at the bigger picture.
Over a 30-year period, the average interest rate for a home mortgage hovers around 7.5%. While this may seem high in contrast to the recent historically low rates, it’s essential to recognize that the current rates are not exorbitant; they simply appear so when juxtaposed with the extraordinary lows we’ve grown accustomed to.
To ease the transition, it’s crucial to reevaluate our perspective on interest rates. Rather than fixating solely on mortgage rates, let’s consider the broader financial landscape by examining our overall monthly debt – commonly referred to as debt service. This encompasses mortgage payments, car loans, credit card balances, unsecured loans, student loans, and any other debts in the financial mix.
“Leverage this equity to pay off high-interest debts.”
What’s your blended interest rate when you amalgamate these debts? As credit card debt seems to be on the rise for many, with rates reaching 20% or more, it’s crucial to assess the collective impact of all debts. While your mortgage may carry a comparatively lower rate, the cumulative effect of higher interest debts could be substantial.
Consider this alternative perspective: tapping into the equity accumulated in your home. With property values on the rise, many homeowners find themselves sitting on unexpected equity. What if you could leverage this equity to pay off high-interest debts and achieve a debt-free status?
Imagine the liberation of shedding the burden of multiple debts and embracing the tranquility of having only one significant financial obligation – your mortgage. Admittedly, this may mean accepting a slightly higher interest rate in the short term. However, the prospect of refinancing down the road offers a glimmer of reassurance.
Picture a scenario where your home’s equity is the key to financial freedom. By liquidating some of that equity, you can eliminate existing debts, become debt-free, and gain the financial flexibility to pursue your dreams, including that next dream home. If you have any questions, please reach out by phone or email.
