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Will Lowering the Interest Rate Save Your Shirt?
January 23rd, 2008 categories: Real Estate Tips
With the Federal Reserve cutting the interest rate by three-quarters of a point on Tuesday and possibly another half a point shortly, as predicted, do you feel that this is a little bit too late or do you think this will have a significant effect on the economy and the predicted foreclosures?
The cut in in the interest rate was designed to help in response to all the coverage on a recession which is being promoted as having a 50% chance of happening.
- Do you think that there is a 50% chance for a recession?
- Do you think we are already in a recession?
Lets just refresh what recession is:
Per Wikipedia: negative economic growth for 2 or more successive quarters in a year. A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits.
and an interesting note:
There is much debate, sometimes ideologically motivated, as to whether government intervention smoothes the cycle, exaggerates it, or even creates it.
Do I think that by lowering the interest rate this will have an effect on all of the foreclosures?
Yes, some. Obviously, not those already involved in the foreclosure process. Other homeowners who have adjustable rate mortgages or sub-prime loans will now have lower payments.
Some homeowners with those lower payments will now be able to afford their house payments and others unfortunately will not.
What this definitely, without question confirms, is that it is one of the BEST times to buy a home and/or investment property while interest rates are down and possibly going down another 1/2 point. This makes mortgage payments less which translates to a better deal for the home buyer or investor.
Speculation is that there will be a tightening of loan qualifications as the months go forward. Just because you are prequalified for a loan today does not mean that you will qualify next month.
Now, how many times have you heard , now is a good time to buy a house or condo? Its true and for those lucky enough to jump on the bandwagon, its going to be a nice ride with no bumps.
If you have an equity line of credit, at 6.0% or more, definitely refinance. Anytime, there is a 1% interest rate difference in what you currently have and what is being offered on a FIXED INTEREST RATE, you should jump on it. (But, not to buy boats, cars, pay off credit cards and go on vacation).
Just make sure that you are with a reputable Mortgage Lender. If you need a referral just give me a call. And no, I dont make any money on referrals for those who wonder, I just get happy, well educated clients that have good loans. Love that!
Let me know your thoughts on the recession. The debate should be interesting.
AND
Do you think the Feds are a day late and a dollar short to this party?
And of course if you would like help with your Real Estate questions or home search please give me a call at 916.417.2699. Sacramento Real Estate Voice is here for all your real estate needs.
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Other Real Estate Tips:
Real Estate Trends for 2008-What’s Hot, What’s Not
What Home Buyers Want in a House for 2007
Homeowner Tips and Home Buyer Tips
When Should a First Time Home Buyer Buy a House?
Tips In Preparing Your Home For Sale
What are the ABC’s of Buying A HoUse?
