Tuesday, January 22, 2008
What to Make of the Federal Reserve Rate Cut
The Federal Reserve cut its key overnight interest rate by three-quarters of a percentage point this morning in an effort to stave off fears over a potential U.S. economic recession. That sounds nice. But what does that mean for all of you?
First, please understand while it’s true the Feds cut the interest rate by ¾ of a point that doesn’t mean if rates were quoted at 6.00% yesterday they are 5.25% today. But it does allow mortgage rates to be a little more flexible which typically means mortgage rates will drop slightly – which they have. Yesterday’s mortgage rates were around 5.7% assuming you have decent credit and can put money down. This morning they are at 5.45%!
Second, since this was a surprise move by the Feds and they are scheduled to meet again in the near future to discuss yet another rate cut there is potential for mortgage rates to fall yet again.
Third, if you currently have an interest rate around 6.5% or higher and you plan on staying in your home another 3+ years you might want to look into refinancing. If you refinanced a $200,000 loan to 5.5% down from 6.5% you will save roughly $129/month on your mortgage payment.
Fourth, if you’re interested in refinancing or if you’re thinking about purchasing a home while the rates are so attractive you’re welcome to call me but I will most certainly end up telling you to call the following 2 mortgage experts that have helped many of my clients purchase first and second homes and refinance their homes as well. I wouldn’t be endorsing them in this email to you, the main source of my business, if I wasn’t confident in their abilities to take care of my clients. I can honestly say they are two of the most professional and knowledgeable people when it comes to real estate finance and I encourage you to use them as a valuable resource.
Coldwell Banker Home Loans