Another article posted by The Florida Upfront Mortgage Broker Joe Bartolotta.
Original post September 19th, 2007
The prime rate was lowered by .5% today in an effort to offer banks the ability to use mortgages as collateral. The mortgage market, as everyone is aware is flat right now, and banks cannot use their mortgage notes as collateral. The Fed put out a statement that said, in part, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward." In response, the markets surged.
Just a note of interest, the prime rate is for short term loans and does not directly affect the traditional 30 year fixed rate mortgages. There may be some reaction by the mortgage backed securities (how 30 year mortgages are priced) but that is typically due to market volatility.
By lowering the prime rate .5%, most people with home equity lines of credit and some credit cards will benefit from lower payments. Let's hope this reduction is not a knee jerk reaction. I'll be sure to keep everyone posted.
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Wednesday, September 19, 2007
Prime Rate reduced
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2 comments:
At what point is refinancing a mortgage really benificial? I have heard at 2 points is the minimum, otherwise it is a waste of effort due to fees, etc. I am at 7.25 for 30 and just bought a mortgage last December.
lodean917@yahoo.com
For some people, they take the cost of the refinance and divide that by the money they are saving to get a time of breaking even. For example, if the cost of refinancing is $5000 and you are saving $250 per month, the time to break even would be 20 months. In this example, if you are staying in your home more than 20 months you would save money by refinancing. I do not have a rule as far as the percentage difference between what you have now and what you could get by refinancing, also, every situation is different and people have different reasons for doing the refinance. One reason could be an adjustable rate mortgage vs getting a fixed rate mortgage. Thanks for the question. Have a great day.
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