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What If My Home Mortgage Rate Goes Up?

By Kevin Landis

Your mortgage interest rate is one of the most important aspects of your home’s overall affordability. With a low interest rate, you could save hundreds of dollars per month on your monthly mortgage payment. However, if you have an adjustable rate mortgage and your mortgage rate increases, several different things could happen.

Your Payment Will Increase

The first thing that will happen when your home mortgage rate goes up is that your mortgage payment will increase. For example, if your home mortgage on a $200,000 mortgage adjust from a 5% interest rate up to a 6% interest rate, your home mortgage payment will increase will go up from $1,075 to $1,200. Because of this, it is important to ensure that your mortgage has an interest rate ceiling.

You Will Pay Less in Taxes

The second thing that will happen when your home mortgage rate goes up is that you will pay less in taxes. One of the main benefits of home ownership is that you will get to deduct all of the real estate taxes and mortgage interest that you paid. When your interest rate increases, you will receive a lot more in tax deductions because you will be paying more in interest.

You Will be More Enticed to Refinance

The third thing that will happen when your home mortgage rate goes up is that you will be more enticed to refinance your mortgage. While your mortgage may adjust and your rate increases, you may still be able to refinance into a lower interest rate. However, when looking to refinance your mortgage you will need to take into consideration all of the costs that are associated with a mortgage refinance.

Related posts:

1. Can My Interest Rate Adjust On My Home Mortgage?
2. Why Did The Payments On My Fixed Rate Mortgage Change?
3. How Do Current Mortgage Rates Affect New Home Buyers?
4. Can Current Mortgage Rates Help New Home Builders?
5. How High Can My Adjustable Rate Mortgage Payment Go?