Here's What Happened and Here's What it Means:

Christmas came a bit early, sort of, for the American consumer this week. The Federal Reserve lowered interest rates on 12/16 to the lowest rate they could at essentially 0%. Let's hope this works because the only place to go now is triple dog 0% and I don't think anyone wants to see Paulson and Bernake with their tongues stuck to the flag pole out in front of the school.

What the Fed is trying to do is spur spending either through use of credit lines or some form of home equity line to help the overall economy. If you are a homeowner, credit card user or equity line user tied to real estate you are affected by this in some significant way depending upon how your particular credit is dictated by the prime rate. In many cases home equity loan rates will go down and lower monthly payments for consumers. This lowering will eventually ease pressure on many different forms of credit either directly or indirectly.

The single biggest fallacy of the post credit crash world is that there is no money to borrow. This is simply not true.

Here's what you must have in order to borrow money for a home purchase:

1) A decent credit score which in the post credit crash world means mid 700's.

2) A job. (not always the easiest thing to maintain in Today's New World of Real Estate)

3) A down payment. This means anywhere from 3% to 20% down depending upon load size and credit score. Yes there are still minimal down payment loans available but you need tremendous qualifications to get it.

4) A savings account with actual money in it. Imagine that....saving money and not spending it.

When I spoke on WIBC on 12/17 with Big Joe Staysniak and Terri Stacy it's clear that consumers are struggling to differentiate between the lowering of Fed rates, the buy back of troubled loans by the Fed and the ending of the Fannie Mae/Freddie Mac foreclosure moratorium. These things are NOT all tied directly together other than they all affect the big pot of monetary stew our country is in at the moment.

As I said at the outset, let's hope this works. The Fed has now taken us to 0. Unlike the car commercials or the 1980's song by the group The Fixx, the phrase 'saved by zero' has a much bigger impact, a critical impact on all of our financial futures.