The Interest Rate Cut and How it Affects Your Home Loan
During the week of December 10th, 2007, the Feds dropped the interest rates a quarter percentage point. This drop in interest rates is the third this year and has a tremendous impact on mortgage rates. What that means for home buyers, those seeking to refinance their mortgage, and those seeking home equity loans is the lowest rates seen in more than two years. Now is the time to seriously seek that new home loan or to refinance your home and lock in the rates regardless of your credit.
For some borrowers, it is more important than ever to start seeking out mortgages as the lending rules will change in early 2008 that will make it more difficult for some borrowers to take out a new mortgage. The reason for the changes has to do with the near collapse of the subprime lending market due to foreclosures. Currently, there are plans in the federal government to freeze initial introductory interest rates for 5 years for some subprime borrowers because many of the teaser rates are now at higher levels and many home owners are struggling with their mortgage payments or simply not able to pay them now that their mortgage is higher. This is both good and bad. The bad part is that after the rules are in place, it may be harder for some to get a home loan. The good is that it may help lock in lower interest rates for a longer period of time for those with lower incomes of spotty credit if you act now.