With Fed Rate Cuts, What Are Your Potential Advantages?
With the new Federal Reserve prime rate cut to 3.5% down from 4.25 percent, which is pretty significant although it may seem small at first glance, what will that mean for consumers? Well, it’s a plan that the Federal Reserve, headed by Ben Bernanke, who was Alan Greenspan’s successor, came up with, at congress’ and consumer’s urging pretty much, to help stimulate the economy and encourage home buying and mortgage applications and prevent a recession all at once. Tall order, huh?
Well, with the new federal rate cut, what can that mean for you? If you’re looking to borrow money for a mortgage on a home, it can mean almost a whole point lower on your mortgage interest rate, which doesn’t sound like much, but adds up to thousands and thousands of dollars on some homes over the course of a typical 30 year mortgage loan. If you calculate that mortgage interest, it is quite a savings and if you figure you can save or invest that savings, you’re looking at thousands of dollars over time!
It’s actually quite exciting if you think about it, and are in the market for a new home. Heck, maybe even some home flipper prospectors will get in on the game and that will stimulate the economy even more. Many people believe the new stimuls package in addition to the decrease in the prime interest rate is not enough to stimulate and fix the economy long term, but rather is a bad idea, that we’re just borrowing money from our children and how are we going to pay it back. What do you think?
