The Good and Bad of the Fed Rate Cut

A featured article written by the AP mentions some information as to why a rate cut is necessary. Some of the reasons are as follows: relief to people, business, and economy, or to "soften the blow on recession". Approved by President Bush as a "rescue package" to include a tax rebate or a tax break for companies. And according to a press release on the Federal Reserve's website, it is because of inflation risks.

Even though a 5.875 interest rate, at the time my husband and I purchased our house was very good, I still think there is some significant difference if there is a lower rate. With our mortgage payment at about $1650 a month and one of us making decent income, necessary expenses to keep us healthy and warm, refinancing would save us some money on a monthly basis.

Per Bankrate.com anyone can check out and compare interest rates locally and nationwide. Spend some time there and do the research on refinance, mortgage, home equity, savings, and checking rates. The website also features the breaking news of Fed rate cut along with a question on whether refinancing would be wise at this time. Just fill out the blanks and find out for yourself. I did and found out I could save at least $600 a month. The question is how much money do I need for a closing cost.

This new rate can definitely benefit my family. Six hundred dollars a month in savings is a lot. That alone will pay for a child's support payment or be used for a family of six grocery's bill. Childcare expenses go up all the time and I've had to pay that much per month, but when it comes to tax time, I would only be able to claim 600 dollars out of the year.

Although there is a good side to this rate cut, there is the downside seeing investments such as interest in savings gaining very little, or 401k investments if one is investing in the wrong funds and not diversifying to international funds and bonds.

But if you are a homebuyer looking to make a purchase, there has never been a better time. And if you are in an Adjustable Rate Mortgage that is about to expire soon, I would suggest you get a fixed rate, lock it in and enjoy this special event.