What Does the Rate Cut Do For You?

Whenever the Federal Reserve increases or decreases rates as it did today, it means different things for different people. The winners will be people with good credit scores because the better your score, the better interest rate you receive. This means that if you have an adjustable rate mortgage, it's a really good time to refinance into a fixed interest rate mortgage. It's also a really good time to look for a new home--your payment will be lower with lower interest rates.

The other reason your credit score is so important is not just the rate you'll qualify for, it's the type of loan available to you. I'm including this somewhat pessimistic article (to appeal to the conservative among you) on today's rate cut, how it affects mortgage rates, and tighter lending standards compared to those of 2-3 years ago which have made certain loans out-of-reach that were once available for borrowers with lower FICO scores. At the same time, FHA loans (usually made with a very low down payment) are on the table with the Senate-passed FHA Modernization Act for an increase in loan amount to assist first-time buyers. There are in fact numerous first-time buyer programs available. In fact, the Los Angeles Times and the California Association of Realtors are hosting a free first time homebuyer fair at the Los Angeles Convention Center in April, 2008.

So if you're looking to refinance or purchase for the long term, you may have a great opportunity at this time.

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