Remember earlier this year when rate cuts caused such a frenzy?  More cuts could follow!  You may be surprised by the facts!

Once the news of a 3 percent interest rate hits hits the news, our phones start ringing off the hook from people eager to lock-in an phenomenally low interest rate.  Here's what you need to know in today's market...

Do Fed Rate Cuts Lower Mortgage Rates?
     No, not directly.  At least, not long-term mortgages.  The Federal Reserve does not determine mortgage rates.  The bond market does.  So Fed rate cuts do not necessarily mean mortgage rates are going down.  Truthfully, fixed-rate mortgages sometimes go up after a Fed rate cut.
     Fed rates are tied to short-term rates like credit cards, auto loans and equity lines, and may even trickle down to mortgage rates.  The Fed Funds rate is the shortest of short-term rates...and long-term, fixed-rate mortgages are all the way at the other end of the scale.

You Can Be A "winner"!
     If you're worried about a weakening economy, the Fed recently lowered its Federal Funds rate to provide immediate relief for borrowers with home-equity loans or ARMS.
     According to the chief economist for Freddie Mac, Frank Northaft, the rate cuts were "...certainly good news...for ARM borrowers...this translates into a smaller increase in payments and maybe even a decline."
     In addition, the Fed lowered its discount rate-which is what it costs banks to borrow from the central bank.  Recently, the Fed cut rates to just 3 percent.  Dropping Fed Funds and discount rates allow banks to drop the prime rate-to encourage you to borrow money!  This means now might be a good time to consider making certain major purchases.

What does this mean for me? 
     The Fed rate cuts mean it will cost you less to use credit cards, or to finance a car, and to take out a home equity line of credit.  It may also lower rates on some ARMS.  All because these types of credit are tied to the prime rate.

Here's How We Can Help You!
     So, we can't get you into a 30-year fixed rate mortgage at 3 percent...but we can promise you exceptional mortgage service, historically low rates and the best possible terms to suite your mortgage needs!

Call us with your questions.  Schedule your FREE mortgage consultation today!