Rising Interest Rates: Reasons to Refinance Now

By Karen Lawson
CMR Columnist

It's no secret that mortgage interest rates are rising, but don't give up on refinancing. If you've owned your home for awhile, refinancing can enable you to pay off high interest rate debt or make home improvements that can save money over time.

Mortgage Interest Rates are a Great Deal

If you carry balances on credit cards, take a look at the rates you are paying today. They will likely go up, too, as they are influenced by the same factors that cause mortgage rates to increase. Depending on the equity you have in your home, a home mortgage refinance can enable you to pay off consumer debt including credit cards. Benefits of paying off consumer debts by refinancing include:
  • Saving money by reducing interest rates
  • Tax benefits--All or part of mortgage refinance interest may be tax deductible
  • Streamline your budget by making fewer installment payments each month
If you have an adjustable rate mortgage, refinancing to a fixed rate mortgage will stabilize your principal and interest payment, and can ease household budget planning.

More Reasons to Consider Refinancing

Your monthly expenses keep going up. You can't live in the dark, and won't give up driving altogether, but refinancing can help you save money on utilities. If you refinance to update windows, plumbing, or heating and air conditioning in your home, you may be able to reduce and stabilize utility bills, while adding value to your home. Refinancing can also enable you to buy a hybrid or high fuel efficiency car. Again, home mortgage interest is generally tax deductible, while interest paid on consumer loans is not. It's important to consider more than the difference between your current interest rate and new mortgage rate. If you want to do home improvement, or improve your household budget, refinancing can be a valuable tool.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She earned an MA degree in English from the University of Nevada, Reno.

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