Ghada Burton Discusses Recent Talks About Federal Reserve Lowering Interest Rates -Are You Looking to Buy or Refinance a Home?
Are you looking to buy a home? Or possibly looking to refinance your existing mortgage? Well, timing couldn’t be better. Ghada Burton from San Francisco, California suggests that lower interest rates can help you improve your cash flow for 2019 and beyond and save substantial sum in interest costs which you would have had to incur over the life of your existing home loan.
On June 4, the market rallied on the news that the Federal Reserve is considering the possibility of reducing current interest rates in response to potential economic downturn as a result of the recent escalation in trade tension between the U.S. and China; other countries are implicated as well.
A Wall Street Journal (WSJ) Article on this issue stated on Tuesday that the Chairman of the Federal Reserve, Mr. Jerome Powell, commented “We do not know how or when these trade issues will be resolved”, but “we are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion”.
The Article added that while Mr. Powell didn’t say whether he thought a rate cut would be needed, he certainly didn’t seem to have a rate hike in the horizon either. Ghada Burton says it is suggested that economists and bankers alike are projecting that the Fed will reduce rates by 0.5 percentage points in September and 0.25 percentage points in December.
So how would this impact you, if you are in the market searching to buy a home or refinance an existing mortgage? I would say, there has never been a better time to do so.
Just remember that a lower monthly mortgage payment will improve your cash flow every month; this added liquidity can be redirected to pay high interest credit card bills (most credit cards charge up to 22% on monthly balances), contribute a higher amount to your retirement plan or IRA contribution or it can help finance your upcoming vacation. Ghada Burton advises that it is a win-win situation that every taxpayer should take advantage of.
Furthermore, Ghada Burton says your cash inflow from a lower mortgage payment would be higher than the tax savings from a higher mortgage payment; this is because your tax benefit from interest deduction is a fraction (equivalent to the effective tax rate) for each dollar of interest you pay.