Sunday, March 15, 2020

Lower interest rates! What does this mean for me?

Hello! If you haven't heard the Feds cut interest rates to 0-0.25% down from where it previously was 1-1.25%. Let's unravel what's going on in the economy and what that means for folks like me and you.

Why are the Feds cutting rates? When the Federal reserve Lowers interest rates they are encouraging economic growth in both the stock market and loans assumed. This makes sense with the current epidemic that seems to forecast regulation and uncertainty.

What does this mean for the money in my Bank Account? The money you and I have in the bank will earn even less than it already is due to interest rate cuts. If interest rates go to negative like the president has proposed saver can actually lose money for keeping their money liquid.

How will it affect my credit card? If you have a fixed credit card rate you shouldn't encounter many changes at all. If you have a variable rate and say the rates have been cut then your interest payment should follow.

Can I refinance my current home loan? Yes, some people will want to take advantage of these low rates available to us. They would want to stay in their home for a few years so it can make sense. Money saved from a lower interest rate must outweigh the closing cost associated with the refinance.

Does the rate cut put me in a better position to own my own home? Yes! Future homeowners will be able to get a home loan and be able to pay down the loan (Principle) faster because the interest on the loan is less. Your home loan over time is basically on sale, you will save tens of thousands over the course of your 30 years fixed mortgage.

Overall, I am pleased to hear that the Feds have cut rates. The reason being is because people will be able to pay less overtime for the capitol that is needed for many people to own homes, businesses, and personal property. Ultimately, preserving their wealth overtime by lending at a cheaper rate.

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