Consumers are eager to think that when the Federal Reserve cuts interest rates, it means that they should call their friendly neighborhood mortgage broker and inquire about refinancing their home loans. It doesn't always work out that way.
Re-financing remains a great way to build wealth and get the maximum benefit out of home ownership. But consumers should not expect that a Fed Rate cut will be immediately reflected in the kind of interest rate they are offered.
Over the past two months, the Fed has cut the federal funds rate by 2.25 points, to 3 percent. This is the rate banks charge each other for overnight loans. The Fed also cut the discount rate, what it charges banks for funds, by 1.75 points, down to 3.5 percent.
So what has been the result? Well, the mortgage rate for A-list borrowers has come down a bit. But risk is still the boogey-man that is scaring off lenders. Any factor which lenders perceive as increasing the risk of default will bump a borrower's rates up beyond what they were when the Fed began the latest round of rate cuts.
We are still in an unsettled loan market, and everything the Fed has done lately hasn't been able to change that.
The Little Black Book of Wealth Building Mortgage Secrets
My book is now available for pre-order on Amazon and other websites. June 29 is the official publishing date for McGraw Hill to hit the bricks with THE LITTLE BLACK BOOK OF WEALTH BUILDING MORTGAGE SECRETS: Insider Strategies for Securing a Stable Mortgage and Avoiding Common Pitfalls in Any Market. Be the first on your block to order one and you'll not only get an invaluable guide to the in's and out's of the mortgage market, you could be making an investment that pays off in more ways than one. You know what the market for first editions is these days! I hope WEALTH BUILDING MORTGAGE SECRETS sees many more editions and leads to a whole series of sibling books.
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