Confidence Game

[RobertB]

Confidence Game
Brian Wingfield, 01.22.08, 1:06 PM ET

It was supposed to be a confidence builder, but the Federal Reserve's emergency rate cut Tuesday sends just one message: The Fed is following. This could spell big problems for the economy.

"This smacks of closing the barn door after the horse is out," says Philip Orlando, a market strategist for Federated Investors, of the Fed's action.

Two things are all but certain when the Fed cuts interest rates: Inflationary pressures increase and investors flee dollar-denominated assets. Tuesday's emergency rate cut indicates that at least for now, the Fed is more focused on helping stocks than fighting inflation. Meanwhile, the drastic interest-rate cuts--coupled with a stimulus package that would add $150 billion to the federal deficit--will batter the already weak dollar.

http://www.forbes.com/home/businessinthebeltway/2008/01/22/fed-bernanke-economy-biz-beltway-cx_bw_0122fed.html

[Biblenuggetlady]

The Fed. Reserve is expected to cut the rate again at their regular meeting next week.

[MochaMel]

Is this the right place to pose this question under this thread? I hope this question isn't off-topic.. If it is feel free to delete mods, not trying to hijack the thread.. lol

But would now be a good time to re-finance your house, equity or car loans??? I caught a bit from the news tonight that interest rates are going to drop on these things plus a few others i didn't hear....

I am SO NOT knowledgable when it comes to stuff like this, but if they are dropping interest rates -- wouldn't that mean that my fixed 6% would be lower now?

Thanks in advance! I hope this is not off-topic; i would've started a thread but didn't have a clue how to name it... :hat

[Homesick777]

But would now be a good time to re-finance your house, equity or car loans??? I caught a bit from the news tonight that interest rates are going to drop on these things plus a few others i didn't hear....

I am SO NOT knowledgable when it comes to stuff like this, but if they are dropping interest rates -- wouldn't that mean that my fixed 6% would be lower now?



When you do a refi you usually incur at least $3,000 in various fees, so you normally need a 1% difference in rates
to make it worthwhile. Wait 12-18 months and you should be able to catch a fixed 15 year home loan under 5%. (Expect a decrease in all types of loans.) Take another look at the trend in loan rates then. We have a few current/former mortgage brokers on these boards to advise.

If the Fed succeeds in reinflating the housing bubble, it could give many borrower's enough equity in the near future (20%) to avoid paying the private mortgage insurance on a new loan. That would be a huge savings and avoid having to take a second mortgage. Be patient for now!

[Cameron]

Pat if you are considering re-financing your home, contact some experts and try to get a reading on whether or not home prices in your area are expected to continue to fall in price.

One thing that got a lot of people into financial trouble is that they were using the equity in their home as an ATM card and ended up owing more than the house was worth.

Say if you re-financed your home and one year from now the value had dropped 20% you could find yourself in that same situation.

JMOO (Just My Opinion Only)

[firstoftwelve]

we're looking at buying a new home as soon as our old one sells, so we're happy to see the rates decreasing. 1. hopefully it'll get more people buying so we can actually sell our home, and then 2. it'll be helpful to us.

[Issachar]

If it is feel free to delete mods, ... Why would you want to delete the mods? :)

Seriously, it all depends on what you owe, closing costs, etc. If you come out ahead, then go for it. There are free mortgage calculators online.

If I find one I'll post it.

Issachar

[MochaMel]

:lol2 Okay we'll keep the mods for now.. ;)

Thanks everyone for the info.!! Will continue to do a little research and be patient.. :thumb

[Logicon]

Here is a site with a mortgage calculator.

http://www.lisapownall.com/mortgage_calculator

[Bernardd]

A Fed Rate cut does not mean that mortgage rates will drop.