Low Rate Loans National average interest rate on this loan is around 7.5%.
After the terrorist attacks in September, 2001 the Federal Reserve has cut of the federal rate, within a year this happen for nine times. It has toppled to 2.5%, the lowest since 1960s, making bounteous for borrowers and lean for lenders. If you come under the bracket of borrower it’s the right time to take low rate loans. Some may be reviewing their 401(k) plans, but mean while don’t forget to fix finances of other areas such as home mortgages, auto loans or credit card debt.
Low rate loans mean lower required payments. Post September 11 period is the ripe opportunity for borrower to lower their financial burden. The national average rate for 30-year mortgages has fallen below 6.2%, which is near the lowest rates ever reported. If a person has already home mortgage it an ideal time to get it refinanced. If you do not have a home get it because lower mortgage rates makes buying a home more affordable. You have mortgage option, either fixed-rate loan or adjustable-rate mortgage (ARM). If one is considering to live for a long time in the same home fixed-rate loan could be good choice for them. They can choose for 10, 15, 20 or 30-year mortgage. The rates are considerably lower and over the life of the loan one might save tens of thousands of dollars in interest payment.
Yet another alternative could be adjustable-rate mortgage (ARM). The most popular ARM is 5/1, where the initial rate changes after live years and then it is adjusted yearly. If a person do not expect of living in his home for longer than five years, it would be good choice to shift from a 30-year loan to a 5/1 ARM. This may help you cut your interest rate by around 0.5%. Other sensible choice could be home equity loans (HEL). The greatest benefit from this loan is that the interest you pay is tax deductible, not the same case is with auto loans and credit card debt. Some homeowners use HEL to pay off other debt. For example if your effective tax bracket is 30%, paying 7.5% of a HEL is like paying 5.25% (70% of 7.5%) after tax deduction, an intelligent investment than paying 8% or even 14% on other loans. But the danger with home equity loans is that if you default in repayment as agreed, you may lose your home as it is kept as security.
Managing finance is an act of prudence, be skillful in playing with interest rates. Some credit cards offers low interest rates or promising you no interest for a few months, one should take advantage of such offers by rolling one’s existing credit card debt into the new card at low rates. The moment the initial offer expires you should roll (the debt over) to another low rate card. Thus, by keeping an eye on financial developments one could switch from high to low interest rates.
