Interest Rates Are Expected to Move. Should You?

William Schumann, First Vice President, Head of Mortgage Sales

William Schumann, First Vice President, Head of Mortgage Sales

Interest rates are at historical lows—you’ve probably heard this before. It’s still true, but sources indicate not for much longer. Even the U.S. Federal Reserve, which influences the direction of interest rates, has indicated rates will be going up.

If you are thinking about purchasing a home, buying before rates rise could lower your overall cost of ownership. Being able to lock in a low rate of interest lowers the amount of your monthly payment.

The current real estate environment has also created another factor those considering making the move to homeownership should be aware of—in some of the markets our bank serves, the selection of homes for purchase is much better than the selection of rental units.

Most homeowners are also able to deduct their mortgage interest on that home. There are no comparable deductions available to renters. Having access to this deductibility can significantly lower the after-tax costs of homeownership by lowering your income tax bill each year.

An additional advantage for home ownership is the opportunity it offers to build equity. You spend money on rent, but a mortgage payment represents both an expense (interest) and an investment in your asset (home equity). As equity builds, so does your personal wealth.

While the aspect of financial benefit figures significantly in the decision to buy instead of renting, homeownership also offers the ability to create a space of one’s own, to customize it to your liking and needs. And, it can provide stability, as well as a place you and your family can refer to as home for years to come.

If you do decide to take advantage of the current interest rate environment, it’s a good idea to “know” before you “go.” Visit your lender first to determine how much house you can afford so that you are only shown options in your price range. It helps make your decision and your home-buying experience go more smoothly.


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