Take Advantage of Today’s Low Interest Rates

With interest rates at historically low levels, there is no better time than now to re-evaluate your borrowing costs. While A New Horizon Credit Counseling doesn’t advocate taking on unnecessary debt, we recognize that borrowing is sometimes a necessity and now may be the time to take advantage of the current bargain basement rates. Additionally, those consumers that have current loans outstanding have some unique opportunities to lower their debt obligations. In a strange twist of fate, consumers can actually save money on planned purchases or on refinancing old debt. Let’s face it, interest rates can’t go much lower and the Federal Reserve, as a way to help the economy recover, has just announced that they have no plans to raise the cost of money to the banks until 2013.

Currently, the average rate for conventional 30-year fixed-rate mortgages is around 4.2 %, a home equity loan is around 6.6 %, and a 60-month new-car loan is 5.2 %.

Here are a few suggestions to get you started:

Refinance your home

If you currently have a 30-year fixed interest mortgage, look at refinancing with a lower rate. If there is a difference of approximately 2% between the old rate and the new, it is generally considered a good idea to refinance. Better still, consider a 15-year mortgage to replace the old 30-year mortgage. With the lower rate you may be surprised that the monthly payment is very close to your old one. You get the benefit of saving 15 years of mortgage interest. Furthermore, for older home owners, the security of having a home fully paid off by retirement age is priceless. The same benefits may not be as attractive if you have a mortgage with only 15 years or less to go. Talk to a mortgage broker and see if the refinance makes sense. It doesn’t cost anything to ask. You can get mortgage calculators for every type of loan at www.bankrate.com.

If you have an adjustable rate mortgage and your house is worth more than the balance of your mortgage principle, now is the time refinance with a fixed rate loan to avoid the dreaded readjustment of your monthly payment.

Buy a home

Low interest rates and a depressed housing market may make it the right time to purchase a home now if you don’t already have one. Again, consider a 15-year mortgage vs. a 30-year. The saving in interest is huge. And, if you are a homeowner already and have some money to invest, you may want to purchase an income property. There is an enormous demand for rentals from homeowners who have been displaced by the foreclosure debacle. Be careful though; being a landlord is not for everyone and the cost of mortgages for investment property is not as low as that available for primary residences.

Purchase a car

While automobile loan interest rates have not bottomed out the way mortgage rates have, they are very attractive and, when combined with the generous incentives being offered by the manufacturers, you can save money by getting rid of your older car; especially if it is costing you more these days in repairs and it is not economical on gas. While you’re at the dealer, check on their special financing for customers with good credit.

Go to www.bankrate.com for information on auto loans and lenders. They also have a easy to use auto loan calculator. While you’re at it, go to Kelly Blue Book’s site at www.kbb.com and check out the current incentives being offered by manufacturers for your favorite ride.

If your present car has low mileage and is giving you no problems, consider just re-financing the auto loan you have on it. Few people know that you can re-finance an automobile loan. You can find sources for this at Bankrate.com.

Negotiate Lower Rates

With interest rates going lower and the cost of money to the bank headed in the same direction, many credit card issuers are offering rates that are more attractive than others. If your credit card issuer is still charging you higher rates than you can obtain by opening a new card, call the bank and ask them to lower your rate. If they refuse, consider opening a new credit card account with a lower interest rate, transfer the balance from the more expensive card and enjoy lower payments. Keep the old card open though. Closing the card may harm your credit score, but keeping one open that you just paid off, can help your score.