Federal Reserve Rate Impact

If you have been following the recent developments with regards to the Federal Reserve rate cuts you may be wondering what it all means for us. The “emergency” rate cuts put into effect by the Fed chairman on Monday are currently creating some favorable situations in the home lending market. The most obvious impact the cuts have made is in the home equity line of credit rates. Also known in the industry as a HELOC, this type of loan enables you to open a line of credit against the value of your home. The two most common amounts of $30,000 and $50,000 have had a dramatic decrease in interest rate since the cuts. The $30k loan has gone from 6.85% last week all the way down to 6.30% this week on average. The $50k loan has gone down even lower; from 6.35% last week to 5.60% this week on average! What a time to take money out via a HELOC for investment purposes! The best news, however, may be yet to come. This week the Fed will have an “official” meeting that may result in even further rate cuts which would made a HELOC loan even more attractive.

Investing with a HELOC

While most people use a HELOC for upgrading or remodeling their current home or buying a new car the best thing to do is invest it. When rates on a HELOC drop they inevitably create a larger margin between the cost of the money and the rate of return on investing it. You could invest it in other rental property, a small business, or even use it to buy some of these stocks that are currently on sale. If you or anyone you know might be interested in learning about how to Use equity to invest profitably please contact me via email.