Fed Rate Cut - In a Nutshell

The Federal Reserve cut interests rates yesterday by 75 basis points in response to growing fears that the U.S. economy is weakening.

Mortgage rates often dip when investors, fearing an economic slowdown, become more conservative and buy up Treasuries and bonds. This causes long-term rates -- and usually mortgage rates -- to fall.

So what does that mean to you? Will your mortgage rate go up or down? Is this a good time to refinance?

In a nutshell:

Borrowers with good credit can take advantage of better terms. People with adjustable-rate mortgages can also refinance to a fixed-rate mortgage. Tightened lending standards will make it difficult for those with less than good credit. If your current mortgage interest rate is 6.5% or higher you should consider refinancing.

Basically, if you refinanced a 30 year, $300,000 loan from 6.5% down to 5.25%, you will save roughly $240 a month on your mortgage payment.

Now is a good time to take action if you are shopping for a home. It's also a good time to refinance to a fixed-rate mortgage.