The Federal Reserve again reduced interest rates recently, dropping the Federal Funds rate to 2% in an attempt to stimulate a slumping economy that is threatening recession. In what *appears* to be the final in a long string of rate cuts, the Fed hopes to spur economic growth by flushing money into the residential mortgage and commercial lending arenas to spur growth in housing and business in general.

If you’re looking for a mortgage in the current environment, think 30-year fixed rather than an ARM or, if you know you’ll require the loan for a short to intermediate-term, run with a balloon or ARM that reaches (no pun intended) far enough out that you won’t have to refinance, pay the balloon payment or get hit with a vicious reset in 3, 5 or 7 years.

Tags: federal funds rate, federal reserve, rate cuts, recession, residential mortgage

Posted in Adjustable Rate Mortgages, Federal Reserve, Federal Funds Rate | No Comments »