What the Fed Cut Means to You

Are you lost in a sea of questions and confusion when you hear about rate cuts? The average person usually shruggs their shoulders, because one overpowering questions is ruling their minds, "How does that effect me?" Today, amid plummeting global markets getting skiddish about a possible US recession, the Federal Reserve came in with a 3/4% interest rate cut. As of this morning, the market was dropping at an alarming rate, and within a few hours of the cut, the market had returned by about 75%. So, basically, who cares if you cannot break it down for me. The cut is designed to stimulate the economy and bring good things for the average citizen:

1. Re-adjusting mortgage rates will still adjust, but at a lower rate, making monthly payments possible and/or less painful.

2. Interest on existing and new home equity loans (HELOC's) will be lower.

3. Credit card rates will be lowered saving the average family $30 a month on payments.

4. Auto loan rates will be lowered.

5. No change will be made regarding jumbo loan rate (loans greater than $417,000)

It often takes consumers 1-3 billing cycles to be affected by the changes, but if you are looking for a new loan or to refinance, the savings will be immediate. This can often mean the difference between foreclosing and keeping your home. The only thing better than a rate cut is coupling it with a tradelines or seasoned primary account purchase. If you are in danger of foreclosing on your home, refinancing after the rate cuts may benefit you by putting you in a more comfortable loan and a monthly payment you can afford.

Ted Stearns, owner of TradeLine Solutions, a San Diego based credit aide company, is not a newcomer to the world of finance. His experience began as an options and futures broker with Currency Trading International about 12 years ago. Since then he has been a financial advisor who hosted a live radio show on AM 1000 KCEO for four years, educating callers and listeners on stocks, bonds and various investments. Over the last five years he has delved into the nationwide mortgage business informing both clients and lenders alike in the arena of purchasing and refinancing.