Not getting any help from the government to improve your financial situation? Use these tips to make your money go further.
Mortgage
Contrary to widespread perception, changes to the federal funds rate do not have a direct impact on mortgage rates. So it's a mistake to use federal funds rate decisions as a gauge for the likely direction of mortgage rates.The best way to cut your mortgage rate is to refinance your mortgage. Although rates have increased significantly in recent weeks, they remain low by historical standards.
If you have an adjustable-rate mortgage and it is about to adjust soon, you typically can lower your monthly payment by making an extra principal payment before your mortgage is recalculated. Talk to your lender about this option.
Finally, the federal government's Making Home Affordable program may help cut your home loan costs if you qualify for mortgage help.
You can compare mortgage rates using Bankrate's search tool.
-- Chris KissellHome equity
If you already have a home equity line of credit, or HELOC, it will be difficult to trim borrowing costs further. Most HELOC rates are tied to the prime rate, which in turn moves in lock step with the federal funds rate. Because the federal funds rate is near zero, HELOC rates are likely at or near their lows for the foreseeable future.For many homeowners, HELOC borrowing expenses are tax-deductible, making them an even bigger bargain right now.
Most home equity loans have fixed rates, so there isn't much you can do to lower your rate on an existing loan.
If you are shopping for a HELOC or a home equity loan, the best way to cut your rate is to improve your credit score. Lenders typically offer the best rates to borrowers with top credit scores.
Falling property values have made it much tougher to find home equity products. Homeowners who can't find a willing home equity lender may want to consider shopping for a personal line of credit.
You can compare home equity rates using Bankrate's search tool.
-- Chris KissellCDs
Occasionally, you'll find a bank willing to negotiate a CD rate with a customer. It usually requires a trip to the bank and a substantial deposit or hefty account balance. Sometimes a better CD rate will accompany a personal loan. But that's the hard way to get a better rate.You're much better off shopping for high-yield CDs. You'll find rates that are significantly better than standard rates. For instance, as of this writing, while the standard yield on a one-year CD is 1.19 percent, the Bankrate high-yield tables are showing one-year CDs with yields from 1.35 percent to 2.35 percent.
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You can also try building a CD ladder, which will enable you to take advantage of longer-term rates, presumably the high end of the yield curve, on a routine basis.
You can compare CD yields using Bankrate's search tool.
-- Laura Bruce