Fed Cuts Rates Again - What it Means for Us
In a suprise move, the Federal Reserve announced this morning that it has cut the Federal Funds Rate three-quarters of a point, moving the key rate from 4.25 to 3.75 percent.
While it was no suprise that the Fed would slash rates, the shocker is that the US central bank would not only make the move before its scheduled meeting next week, but also implement the biggest federal funds rate cut on record going back to 1990.
In addition to dropping the funds rate, which governs overnight lending between banks, the Fed also slashed the discount rate it charges on direct loans to banks by three-quarters of a point to 4 percent. Many economists believe rates could be cut again at the Federal Reserve's scheduled meeting on January 29-30.
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What does all of this mean for real estate in Rutherford County?
Commercial banks have already dropped the prime lending rate, which is the benchmark for millions of consumer and business loans, from 7.25 to 6.5 percent. Mortgage rates are likely to follow suit in the coming days and weeks.
While banks have been tightening up their credit requirements, money is quickly becoming cheaper to borrow than it has been in many years. If you've been thinking of buying, what are you waiting for? The combination of a buyer's market in Rutherford County and amazingly low interest rates is creating a historic opportunity to buy more house for less money.
If you currently own a home that you plan on staying in for a few years, take a close look at refinancing options to lower your rate and shorten the length of your loan. The current environment is ripe for some people to drop from a 30-year mortgage to a 20-year or even 15-year loan with payments remaining similar to what they have now.
If you have to sell, pricing is the most important factor in this market. If you price it correctly, a buyer can be found relatively quickly. If you overprice your home, it will sit. Don't get caught up in what you "have" to get out of your house. Know that the market sets the sales price, not you or your Realtor. Look at your home sale and next purchase as one big picture. Yes, you may get less than you would like for your current house, but at the same time you will likely find a great deal on whatever you purchase. In the end, you'll be a winner overall if you let market forces work for you instead of against you.