Cheer Up! You Have More Money in Your Pocket Today

As you probably konw by now, short term rates are down. The Fed just cut the Federal Funds rate by 0.75% – which means prime is down as well. As a homeowner if you have a HELOC tied to prime then your monthly payment will go down by 0.75%.  Be aware that this cut does not directly change mortgage interest rates.

There is a lot of talk about this emergency rate cut and for good reason. Below is a chart showing how prime has changed over the past two years.


In the beginning of 2006 it was at 7.50%. It rose to 8.25% in June 2006 and stayed flat until September 2007. After that it’s been all down hill. In fact since that time prime is down 1.750%. Today it sits at 6.50% (lower than what it was two years ago).

What does this mean to you? Well if you have a $50,000 home equity line of credit (HELOC) at prime then here is how your monthly payment has changed these past two years.


Since August of last year your monthly payment on this HELOC has fallen by $72.92. Not bad! Now you can’t say you don’t have money to save for retirement.

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