How the Fed Rate Affects Mortgage Rates

Fixed-rate mortgage rates, though not directly tied to the Fed Funds Rate, have been responding positively to market rate cuts over the past few months.

Just as an overview, the Fed Funds Rate has a strong (if not direct) affect on the following:

• credit card rates
• adjustable-rate mortgages
• interest on savings accounts
• Prime Rate (home equity lines are based on this)

If you're considering refinancing or purchasing a home, now is the time. With rates at these levels, you'll enjoy more house or mortgage for the same payment. Just lowering your rate 1% on a typical $200,000 mortgage can save you about $125 a month or $45,360 for the life of your loan.

And don't forget, housing prices are the lowest they've been in generations. The opportunity to purchase a home with a low price and low rate is unprecedented. Real estate investors who do their homework and invest wisely can also get deals they couldn't have even dreamed about just a few years ago.

Thanks to the Fed Funds Rate dropping to the lowest level in history, mortgage rates have also dropped.

Waiting may be one of the costliest decisions you've ever made!