Posted By: Sean Terry | December 16, 2008
What does the Fed Rate Cut Do For You?
Sure mortgage rates will drop, but the banks are essentially saying that .25% is a great rate and banks should be happy to have money that is stagnant but not losing is a good investment.
The Federal Reserve has cut its target for a key interest rate to the lowest level on record and pledged to use “all available tools” to combat a severe financial crisis and prolonged recession.
The central bank says it reduced the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 percent. That is down from the 1 percent target rate in effect since the last meeting in October. I get the feeling this is not what Bernanke signed up for when he took the job as Federal Reserve Chairman.
I just spoke to Ari Schiff from US Capital Mortgage and he said that the rate for an Investor Loan at 75% loan to value is 6.75%. And if they would like to “Buy Down The Rate” for 1 point the rate will be 5.75%.
So what does this do for you? Well, it will impact your cash flow dramatically for sure. Also your HELOC payments will decrease which will free up more cash.
If you would like more info, please call Ari Schiff at 480-688-5620
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