This morning the Federal Reserve cut the discount rate another 1/2 point, providing the lowest rate in something like nine years. If you have a long-term mortage at an interest rate of say over eight percent, now might be the time to investigate refinancing. Same goes for using a home equity loan to pay off credit cards (however, this only works if you terminate the cards you are paying off). Otherwise, you are likely to end up with both a home equity loan and new debts against these cards.

-- Ken S. in WC TN (scharabo@aol.com), September 17, 2001

Answers

Ken,

Thanks for the heads-up. We've been wanting to refinance our mortgage, but we're waiting for the right time.

Is there a website that I can link to obtain this information? I'm sure I could find something if I search, but it's much more fun just to ask you since you already know where to look. Many thanks again.

-- Charleen in WNY (harperhill@eznet.net), September 17, 2001.

It is on all of the news programs.

There are programs which help you decide whether or not it is worthwhile to refinance. You crank in the old rate, the new rate, outstanding balance and years remaining and it does the calculations for you. However, I don't know of a specific site. Your lending institution should be able to help you on this.

Say you can reduce your payment from $500 a month to $460. Continuing a payment of $500 a month will help reduce both the cost and length of the loan since the extra $40 goes to principle in most cases.

-- Ken S. in WC TN (scharabo@aol.com), September 17, 2001.

The Bankrate website has calculators to help you figure out what your payments would be. They also have a search engine that will help you find the best rates in your area.

BankRate

-- Sherri C (CeltiaSkye@aol.com), September 17, 2001.

Most banks do not tie their home loan rate with the discount rate. The bank that has our mortgage uses the ten year bond to determine its' loan rate. Therefore the discount rate may go down, but the loan rate may go up depending on what the ten year bond is doing at the present time. The bank needs something with a longer window,for their security, such as ten year or in some cases the 30 Govt Bond.

Just something to remember when loan hunting or refinancing.

Good luck with that cheap loan.

-- Bob in WI (bjwick@hotmail.com), September 17, 2001.

Here are the Bloomberg quoted rates as of 9-17-01:

bankrate.com Current 1 Month 2 Months 3 Months 6 Months 1 year 15 year mortgage 5.99 6.09 6.27 6.32 6.18 7.30 30 year mortgage 6.39 6.49 6.68 6.78 6.59 7.61 1 year ARM 5.43 5.54 5.76 5.81 6.20 7.19

-- Joe (CactusJoe001@AOL.com), September 17, 2001.

Thanks Ken, you just made my day. We just bought 5 acres in the COUNTRY and might need a bit of cash.

-- jz (oz49us@yahoo.com), September 17, 2001.

We got our loan 7 years ago on our place, it was for 30years. It was 7.5 then went to 8.9 and it just droped 3 weeks ago to 6.7 our pmts were 298.00 on a 33,000.00 loan. We payed 100.00 a month extra and in 7 years we only owe 16,500. My husband said he figured it out and if we were making the pmts like they wanted we would still owe 29,000 I mean that is unreal!! Well with the new intrest rates they sent us a new pmt book and now our pmts are 203.oo so that means almost 200 a month extra is going on the principal, to cool. This place is gettig payed off fast. His folks have owned the same place since he was 5 year old but my folks never bought a place and still rent and they are in there 60's that has got to be hard!

-- Teresa (c3ranch@socket.net), September 17, 2001.