Fed Funds Rate Down To 3.5%
The U.S. Federal Reserve Issued An Emergency .75% Rate Cut!
Mortgage rates are back to the levels of 2004! Don't miss out on your opportunity to lower your payment, and lock in a historically low, fixed interest rate on your mortgage.
Why did the Fed cut the rate...?
In response to tumbling foreign and domestic stock markets, and over all fear of a U.S. recession, the Federal Reserve announced today am EMERGENCY RATE cut of .75%. This brings the federal funds rate down to 3.5% and more importantly for you the Prime lending rate to 6.5%.
This is the first emergency rate cut since 2001, the largest since 1990, and is in a preemptive measure to the weakening economic outlook.
| “Yesterday, almost half of the world’s biggest stock indexes fell into a bear market as mounting concern about a U.S. recession dragged down banking and retail shares across Asia, Europe and Latin America.” -Bloomberg.com |
More importantly, what does this mean for you and your current mortgage situation…?
If you have an adjustable rate mortgage:
Look at your options for securing a fixed mortgage program. Even if you have a few years before your adjustment it can’t hurt to see if there is an immediate benefit to lowering your interest rate and extending your loan term. Interest rates for 30 year fixed mortgages are back down to the mid 5% in some cases. We are seeing more and more opportunities for our clients to refinance with NO COST to you and WITHOUT raising your mortgage balance.
If you are in a 30 year fixed mortgage:
If you are in a 30 year fixed program right now and have any rate above 6.25% then it’s worth checking to see if we can lower your interest rate with a new 30 year program. By lowering your interest rate and payment we can show you how to take the interest savings with your new loan and accelerate the payoff of your home.
Even though the fed rate does not directly effect new 30 year fixed mortgage rates, the underlying motivation behind the Fed's decision to cut the rate is good news for new mortgage rates. It is a little confusing, and too in depth to go into hear, but if you would like to hear about what effects mortgage rates and why, please call me at 619.888.HERO (4376).
If you have a Home Equity Line of Credit (HELOC):
As long as you are in an adjustable HELOC tied to the “prime lending rate”, you are going to see the interest being adjusted down by .75%... the same amount the Fed cut rates this morning. This should reflect in your statement/interest payment over the next month depending on your billing cycle.
If you are in a fixed rate second mortgage, there may be an opportunity to better your situation by changing the type of mortgage program you are in, or by combining the second into a new lower rate first mortgage. Please call me to discuss your situation, and see if you can benefit by making a change.
If you are in an Option ARM/Negative Amortization Loan:
Get a copy of your mortgage statement out and see what “index” you are tied to. This is important! If you have one of these mortgages and are tied to the Monthly Treasury Average (MTA), this Fed rate cut will benefit you in by reducing the total amount of interest due each month… Need Help understanding this loan CALL ME, they are complicated and I can help you understand what is going on!
Please consider me your mortgage industry resource should you have any questions on issues personally or in the news which need clarification. If something comes up and you have a question about it, give me a call and we’ll get to the bottom of it.
To Your Financial Freedom,
Brian Daly
Heroic Financial Services
Phone: 619.888.HERO (4376)
Fax: 619.639.0355
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