The average household in America today is carrying a credit card debt of more than $15,000. And that number is increasing, not declining. Worse than that, the average interest rate on that debt is FIFTEEN PERCENT! So how about you? Do you know what your options are in today’s market?
Here with some good advice is our real estate expert John Adams.
Q: John, I know you are about to tell me to refinance, but we’ve all heard the ads til we’re blue in the face. “Rates are low - refinance now!” Why are we still talking about this?
A: Because a staggering number of people have failed to move to a lower home loan rate, and an even larger number of folks are carrying credit card debt at a double digit interest rate.
Q: Why would an intelligent person fail to take action and give up the opportunity to refinance?
A: There are lots of possible reasons:
Maybe they just don’t know how to get started
Maybe they only have a few years left on their existing loan, and don’t understand the dramatic savings they can get
Maybe their credit was hurt in the recession and they are afraid to try & be turned down
But I believe the biggest reason is that we’re all busy living our lives and we just don’t want to take the time to pursue a home loan application.
Q: So why are we talking about this now? What’s the urgency?
A: Well, the Federal Reserve Bank has been holding down interest rates through a process called “quantitative easing” since 2008. It started buying hundreds of billions of dollars worth of mortgage backed securities, causing interest rates to go down and make home ownership more affordable.
Q: So, what’s wrong with that?
A: Only one little problem. The money that the FED is spending - it simply doesn’t have. So they are just PRINTING IT! And when you print lots more money to pump up your economy, it makes each dollar WORTH LESS.
When that happens, we usually expect to see inflation, so that is when the FED stops printing money, hoping to cool off the economy. In a nutshell, as we start to see at least a little relief from this recession, we should expect interest rates to begin to rise.
That’s why we want to encourage folks to ACT NOW, because these rates can’t last.
Q; How do we know rates will be going up?
A: Federal Reserve Chair Janet Yellen said so recently, and when she says so, it usually happens.
Q: So, when can we expect rates to begin climbing, and how high will they go?
A: No one knows and no one knows.
Q: That’s not much help! So what’s a debtor to do
A: Well, my advice is to replace all your mortgage debt you currently own if it has an interest rate of 4% or higher. And here is the important next step. Fold in to that refinance balance any and all the adjustable rate debt you carry on credit cards or personal debt.
Q: Can you do that? Are there any potholes out there?
A: Sure, there always are, but the bottom line is that rates are as low now as they have been since the Lehman bROTHERS CRASH, AND THAT SIMPLY CAN’T LAST.
By replacing adjustable rates with long term fixed rate notes, you can really make a dramatic difference in your finances.
There is one other reason I want viewers to act now.
Q: What’s that?
A: There is an unusually large spread between 30 year fixed rates and 15 year loans. If you can discipline yourself to make the higher payments called for in a 15 year fixed rate loan, you can lock in now at about 3.25%.
I do not believe we will see a rate anywhere close to that again for another 20 years - maybe longer. Any you’ll have your debts paid off in half the time!