January 31, 2008

 

I was talking to a friend of mine in the banking business last night after church and asked him what the mortgage rate currently was. He told me that they are giving 4.5 to 5 APR percent on mortgages. When you combine the lower interest rates and the slump in the housing industry, buying a home is becoming more and more attractive.

 

Yesterday the Federal Reserve cut the prime rate to 3 percent. This move is good for consumers, whether they are shopping around for a low interest mortgage, equity loan, or even a credit card.

 

A quick bit of advice, just because the interest rate is falling don’t use it as an excuse to take on more debt. Over the next two months or so, consumers are going to see lower rates for loans and credit cards.

 

If you are in a position to refinance your current mortgage or are shopping for a new home the next couple of months are going to be ideal for getting a great deal.

 

Another good thing to come out of the prime rate cut is that most adjustable rate mortgages (ARM) are likely going to drop as well, which will offer relief to those stuck with an adjustable rate mortgage.

 

Student loans will follow suit and for those that are consolidating their student loans the ideal time to do so is approaching. The projected decreases in the federal education loan interest rates haven’t dropped this far since 1992.

 

I had heard that the Fed is considering more cuts, from what I have read they will need to cut the prime to 2.5 percent to keep the economy out of a recession.

 

What does this mean for you? It means that interest rates are going to continue to drop and for consumers looking for a new home, refinancing of an existing mortgage, or shopping for a great interest rate on a credit card your time is coming.