Ben Bernanke and the Fed brought financial aid to the streets, lowering the Federal Funds Rate and Discount Rate by 0.50%. In an unprecedented emergency move, central banks across the globe joined in lowering interest rates.
This move follows Washington's passing of the $700 billion Rescue Plan. From Wall Street to Main Street, a common concern has been heard by Washington. "We need money... no, let me rephrase that...we need cheap money."
Rates Could Rise From Here ARM Holders Take Notice!
Home loan rates have benefited from the weakness in the financial markets. Fixed rate mortgages remain very attractive. However, the Fed lowers short term interest rates to shore up financial markets. This could cause home loan rates to rise in the coming weeks and months if confidence returns to the stock markets.
Anyone that has an Adjustable Rate Mortgage (ARM), take note. The London Interbank Offered Rate (LIBOR) has soared from uncertainty in financial companies...And six million home loans in the United States are tied to LIBOR which determines the interest rate at the time of adjustment.
If you know someone with an ARM, let them know potential trouble lies ahead and the time to act is now.
What Should You Do Now?
Call me. We can go over your situation to determine how you can benefit from the actions. I look forward to hearing from you.
Karl, most don't call until it's too late. Then my company has to step in and try to save them. All those with ARM's should have be contacting a mortgage company as soon as they realized that they would be in trouble. Half of these short sales and floreclosures might have been stopped. All the news telling folks to refi and they still sit and wait on the miracle that wont happen.
Hi Nancy,
I think the media is the biggest culprit. If you watch the news they would lead you to believe you need a 720 FICO and 20% equity to qualify for a mortgage right now. We both know that is not even close to being true. I believe fear and embarrassment prevent people from calling to ask for help until it's too late. I worked in the credit card industry years ago and saw the same pattern. People would wait until they were in way over their heads before reaching out for help, perhaps hoping for that miracle.