CNNMoney.com says in a recent article that rates will go up to 7% within the next 6 weeks (article written 8/4/08) http://money.cnn.com/2008/08/04/real_estate/mortgage_rate_lock/index.htm?postversion=2008080408 . That's almost a full 1% above current rates. Not that I know more than they do, but can you imagine what that will do to a market that is almost non-existant now? Talk about adding fuel to the fire. What does this mean for you? Well, you may want to consider locking in a rate if you have a contract on a house or if you have just been considering refinancing. If you lock in with JS Mortgage Company and then rates get better we will float your rate down to the current market (subject to time limitations of your closing date).

Because of the "mortgage crisis" interest rates are determined by more and different criteria than they used to be. Depending on tour individual scenario you could end up with a much higher rate then the guy next door even though you both are just refinancing. Loan-to-value (LTV), credit scores, purpose of loan, and type of rate (fxd or variable) all go into determining the final rate. Most people "cash-out" to do major home improvements, but did you know that the lenders have found that "cash-out" loans are the most risky? Do you think they want to get a higher rate of return on a higher risk loan? You can be assured they do. Many times when people cash out they are also required to get private mortgage insurance (PMI) because their LTV goes up above 80%, even if the value of the property is improved by the improvements, the LTV is determined when the loan is made, not after the improvements are done. The best way to avoid these problems is to consider a "renovation" loan. They will not classify your loan as cash-out, which means a better rate, and they will allow you to use the "after improvements" value to determine LTV, which can mean lower or no PMI.

Rates are steadily headed up and the perception now is that things are really not that bad with the economy. Did you lock in when they were low? If so then you are probably one of the many who did not get to reap the benefits? What do I mean? Well, unfortunately many many borrowers locked into the low interest rates only to be denied. Statistics show that although there were a lot of new applications many were never closed. Why? Because the collateral was not sufficient or the borrow did not qualify due to their credit scores, even though the were well into the mid 600s. Others were told their rate would be higher because of their scores and loan-to-value, so the decision to refinance now didn't make sense. Why do I mention this? because now more than ever it is important that you choose an experienced mortgage consultant that can offer a variety of options. Many unseasoned loan officers unknowingly led their clients down an unfruitful path. I have had more people call and tell me the bank denied them (the bank being Wachovia, Bank America, First Citizens, NBSC, SCNB, Carolina First, et al with Wachovia being the leader) and that they were not really told why. The "credit crunch" is upon us and it has brought many changes. Couple tightening standards with "valuation" problems and you have a minefield that only experience can navigate.

The two quasi government agencies Fannie Mae & Freddie Mac have changed the way rates are determined. What does this mean to you? It means that on your next mortgage loan you may end up with a higher interest rate than the lowest rates posted because your credit score is not 680+. From now on any new loans that have an LTV over 70% will require a higher rate depending on how far the FICO score is below the 680 threshold.

One of the hardest hit groups from the subprime crisis is not the middle class with some credit problems but the folks buying $500,000+ homes! Why? Because market liquidity is drying up and any loan over $417,000 is considerd "non-conforming" which means it does not fall into the safe category of "conforming" which is what Fannie Mae & Freddie Mac purchase ( and about the only thing wall street is considering right now). Rates have gone up on JUMBO loans more than 3/8ths (.375%) in the last week while conforming rates have gone down 1/8th (.125%). That equates to $126+ per month more on a $500,000 dollar loan while the "average" person will be paying $20 less per month.

Yes. There are several loan programs that allow you to finance improvements at the same time you are purchasing the property. The key to structuring the financing to best fit your needs requires a solid understanding of the pros and cons of different programs. One of the most important features of the loan program is what method it uses to determine the value used to determine the Loan-to-Value. Some use the purchase price plus the cost of the improvements and usually offers a maximum LTV of 95%, or in other words requires a down payment of 5% minimum. Another method uses the "as completed" or the estimated value after the improvements are made. This can sometimes improve your borrowing power by reducing the down payment required, reducing PMI (private mortgage insurance) that may be required, and in some cases reducing the interest rate. This can also be advantageous in situations where income and asset documentation alternatives are needed. JS Mortgage Company is one of the only lenders offering a rehabilitation loan that allows up to 97% LTV financing of purchase price and renovation costs under Fannie Mae's MyCommunity Mortgage program. The MyCommunity product is designed for first time home buyers, low to moderate income borrowers, and borrowers who do not have funds for a downpayment.

If your purpose is to take equity (cash-out) out of your home to payoff other debts, payoff an adjustable home equity loan, remodel, or any other worthwhile endeavor, then this is a good time. Why? Because the market is poised to have a significant rate drop within the next 18 months. So why shouldn't you wait until then? Well, if you need the cash now then why wait? If you structure your loan correctly you can still take advantage of lower rates when that happens and secure a good rate now in case they don't. The products that are now available will surely change due to the overall credit problems affecting the mortgage industry. Another good reason is that when you "cash-out" now the banks charge additional fees and/or higher rates because it is considered "risky" when you take cash out and reduce the collateral's positive equity. When and if you choose to refinance during the coming rate drop period it will be a win-win situation because the loan will not be classified as a "cash-out", because you will only be refinancing the new balance that includes the cash out that you already received. And, the rates will be lower meaning your monthly payment will be less. And, if you planned ahead and structured the loans properly, you will not be incurring closing costs twice.

Even if you don't have a subprime loan and even if you have excellent credit the subprime (less than perfect credit) mortgage industry problems are spilling over into the mainstream and having an impact on everyone and everything including the economy. From the fact that there are fewer sources of money (and they are dropping daily) to the tightening of credit standards and requirements for more downpayment security, the effect is gaining momentum like a snowball. Combined with the slumping real estate market the subprime chaos is dragging the economy down and worsening the real estate market. With fewer sources of funding and more potential buyers locked out, the real estate market will only worsen. Along with this the rates for prime mortgages are not dropping as they should or normally would because there is a "concern" among investors that the subprime situation hasn't hit bottom yet. If that isn't enough most people are taking a "wait and see" approach to buying new homes or refinanicng to get cash out (to spend and help the economy).