Local impact of interest rate cut
Thursday, April 19th 2001, 12:00 am
By: News On 6
So how does all of this financial wrangling on the national front affect you? KOTV's Tami Marler has been talking with some local experts, and she has some good news.
On Wednesday, the Fed cut the interest rate banks charge each other. Commercial banks followed by cutting the prime-lending rate to the lowest level in more than six years. That means you can borrow today, for less. Tulsa homeowner, Charlotte McCullough says "I'm going to make improvements to my house. And further increase the value." After nearly five years of owning her home, McCullough saw an opportunity to build upon its potential. "My objective, I refinanced the amount I had, I didn't take any money out - was just to get a lower payment." Lower by about a hundred dollars a month, that's $36,000 over the life of her loan. She did it by what's called "locking in" to an interest rate. She made an agreement with her lender to reserve her loan at 6.99% interest. "Just to hold it, to make sure it didn't go up. Because I know they're fluctuating a lot."
After the Federal Reserve Bank dropped interest rates again, mortgage experts are recommending homeowners and prospective homeowners consider locking in. Stephen Glenn MBA, Performance Management Mortgage: "We've got some good economic news for mortgage rates. Let's take advantage of it. You could lose that in a day or two; and we could be waiting for it to come down again." Glenn says there are several things you should be ready to provide before you can lock in to a low rate. "I want to know what your income is, I want to know if you're employed, I want to know what your credit history is. I want to have all that on file and on record, so that when you're ready to execute, I can tell the world that you're ready to buy."
In addition to homeowners looking to refinance, Glenn says lower interest rates create a prime opportunity for renters, and anyone paying $600 or more a month in rent should consider pre-qualifying for a home loan. It's just like money in the bank. "All pre-approval does is give you a relationship with a lender so that he knows that you are capable of buying the house that you want. It's a separate decision whether you execute the decision to get the mortgage or not." Stephen Glenn says some mortgage lenders have programs for people who don't have perfect credit, and it still makes more financial sense than renting.
Right now, local rates range between 6.75% and 7.5%. That rate depends on how much up-front money you're willing to spend, and how long you want to take to pay it back.