Interest Rates

Feds Raise Interest Rates, Promise More

June 19, 2018 By Twila Van Leer

The Federal Reserve raised the prime interest rate recently by just a small percentage, but enough to raise expectations that Americans will face higher borrowing costs for homes and other big-ticket items., including credit card costs.

The benchmark rate now stands at 1.75 to 2 percent. It’s the first time the rate has reached that level since 2008, when the economy tanked while the feds were hoping to get rates down to zero.

The recent action indicates the Fed has confidence in the current economy and that it has enough strength to accommodate a slight increase in borrowing costs. The increase is evidence that recovery from the 2008 recession is strong.

The current increase is the second this year and the seventh since the recession.

While announcing the increase, the federal agency also indicated that two other jumps in the prime rate are likely this year.

Buying A Home? Check This List

March 30, 2018 By Twila Van Leer

Buying a home, for many Americans, is like slipping into a foreign country. Myths about mortgages abound. Go into the process as well prepared as you can by considering these facts:

• Perfect credit is required. Not so. Having a higher credit score is helpful and may get you a lower interest rate, but it is not the only factor a lender considers when you come to borrow money for your home. If you can show that you are able to repay a loan you probably can swing the loan if your credit score is above 670.

• Rising interest will prevent your owning a home. Rising interest rates do, as a matter of fact, affect how much of a loan you can qualify for and the kind of loan you might be offered, but it doesn’t mean you are out of the market. CoreLogic projections show that an 0.85 percent increase in interest will cost the buyer another $100 per month. That may seem like a lot, but it is less than the period of all-time high interest rates in the early 1980s, when a fixed 30-year mortgage rate was at 18 percent.

• You need a 20 percent down payment. Conventional home loans may make this requirement, but there are other options. FHA loans require only 3.5 percent down. VA loans may be financed for up to 100 percent of the price. Lending institutions often have provisions for loans with a minimal amount down, say $1,000. The downside of a small down payment is that you may be required to buy private mortgage insurance.

• Prequalification means you have the loan. Going through a prequalification process determines how much mortgage you can afford by computing your income and liabilities, but it is not a binding agreement. The potential lender will look at additional documentation before you are fully approved.

• A 30-year mortgage is best. It’s the most popular option, but not the only one. A 15- or 20-year loan can save a lot in interest payments. An adjustable rate mortgage starts with a fixed rate then is adjusted according to market factors. That means your payment will fluctuate over time.

Don’t compare mortgage options based on their advertised rates, but look at their annual percentage rate, which lenders are required to advertise, along with mortgage interest rates. The APR includes estimated fees and other charges, giving you a more accurate picture of what you can expect.

Federal Reserve Keeps Interest Rates The Same

June 25, 2008 By Sherry Tingley

Directly from: Bank Rate

Short-term interest rates remain unchanged as honchos in the Federal Reserve try to figure out which is the greater danger: inflation or recession.

After reading this article I wondered what I have missed in my basic education. Do you have to take a class in interpretting what this means in our lives? It seems the economy and anything that affects it is so far beyond the individual consumers control that it is down right depressing.

My question to you, the reader is:

“What can we as consumers do to help the economy turn around and start looking hopeful again?”