The new rules of the credit crunch - GoFuckYourself.com

Barefootsies · 10-01-2007, 04:58 PM

Good-bye, easy money. Hello, credit squeeze. If you haven't tried to borrow since the subprime chaos began, you'll find your friendly money bazaar a much more cautious place.

The lenders that in 2005 threw funds at anyone with a pulse have begun to insist on proof that borrowers have a prayer of paying them back. Even if you have a high credit score and a flush bank account, you'll likely feel the difference. So you'd better get to know the new rules.

Mortgages

What's happening: Several species of exotic mortgages are headed for extinction, including the 2/28, the 3/27 and those requiring no proof of income, says Paul Haarman, vice president of Renaissance Mortgage Corp. But the effects of the mess have extended beyond subprime.

According to the Federal Reserve, about one in seven banks has toughened home lending standards even for borrowers with good credit. You'll find lenders stingier on appraisals, more persnickety on documentation and far less likely to finance 100 percent.

Also, at the high end, rates on the 30-year jumbo (over $417,000) jumped nearly a percentage point between June and September.

What to do: If you have an adjustable-rate mortgage, read your agreement to find out when your rate will reset, how high it will likely go and how high it could go.

If it's coming due and will end up above 7 percent, consider refinancing to a fixed rate. You'll need 10 percent equity and a credit score over 660.

Must buy? Get the best fixed rate you can (rates on a 30-year fixed are currently a sliver above 5/1 ARMs).

Home-equity loans and lines of credit

What's happening: These are generally holding at about the prime rate, now 8.21 percent if your credit score is above 680 and you can prove income. But you can't tap 100 percent of equity anymore; you'll be lucky to get 80 percent.

What to do: Just because you can get a home-equity loan or HELOC doesn't mean you should. Home prices are falling nationwide, and you don't want to borrow against shrinking equity unless it's the cheapest way to finance a necessary purchase, such as college or medical care.

Credit cards

What's happening: Hurting from subprime exposure, banks are looking to increase revenue. Coincidence or not, credit-card terms are slightly higher. Intro offers have gone from 12 months at 0 percent to three months at 1.9 percent and up, says Curtis Arnold of CardRatings.com.

And issuers are increasingly triggering rate increases, he adds. Discover, for example, hiked its highest-risk customers from 17.99 percent to 18.99 percent.

What to do: Now more than ever, pay on time and check your bill to be sure your APR hasn't risen.

Auto loans

What's happening: Car loans have hovered for the past year around 7.4 percent, with highs of 25 percent for those with poor credit. So far these have been impervious to the crunch, says Chintan Talati of Edmunds.com.

What to do: You may be tempted, as in the past, to use a tax-deductible HELOC to buy a car, but think twice. Real estate is unstable, it's harder to get prime on a HELOC and paying it back requires discipline. If you can get a 7 percent to 8 percent auto loan, take it.

http://biz.yahoo.com/hmoney/071001/1....v=1&.pf=loans

$5 submissions · 10-01-2007, 05:01 PM

That article gives support to the notion that even the Fed's recent rate cut wont dampen the industry trend towards tighter credit...

fuzzylogic · 10-01-2007, 05:15 PM

thx for the post

Barefootsies · 10-01-2007, 05:15 PM

Quote:

Originally Posted by $5 submissions

That article gives support to the notion that even the Fed's recent rate cut wont dampen the industry trend towards tighter credit...

True dat.

That article makes it sound more like the end of the world is nigh

Barefootsies · 10-02-2007, 08:54 AM

Quote:

Originally Posted by fuzzylogic

thx for the post

pocketkangaroo · 10-02-2007, 09:32 AM

Quote:

Originally Posted by $5 submissions

That article gives support to the notion that even the Fed's recent rate cut wont dampen the industry trend towards tighter credit...

Nor should it. The credit industry gave loans out to people with no income, no money down, and bad credit. Having a little responsibility behind the loan industry isn't exactly a bad thing.

Barefootsies · 10-02-2007, 02:13 PM

Quote:

Originally Posted by pocketkangaroo

Nor should it. The credit industry gave loans out to people with no income, no money down, and bad credit. Having a little responsibility behind the loan industry isn't exactly a bad thing.

I concur

StickyGreen · 10-02-2007, 02:15 PM

Buy real physical gold...

sniperwolf · 10-02-2007, 02:34 PM

So true! Nice Article.

over38 · 10-02-2007, 03:01 PM

I just closed with a no doc loan, no problems at all

10-01-2007, 04:58 PM	#1
Barefootsies Choice is an Illusion Industry Role: Join Date: Feb 2005 Location: Land of Obama Posts: 42,635	The new rules of the credit crunch Good-bye, easy money. Hello, credit squeeze. If you haven't tried to borrow since the subprime chaos began, you'll find your friendly money bazaar a much more cautious place. The lenders that in 2005 threw funds at anyone with a pulse have begun to insist on proof that borrowers have a prayer of paying them back. Even if you have a high credit score and a flush bank account, you'll likely feel the difference. So you'd better get to know the new rules. Mortgages What's happening: Several species of exotic mortgages are headed for extinction, including the 2/28, the 3/27 and those requiring no proof of income, says Paul Haarman, vice president of Renaissance Mortgage Corp. But the effects of the mess have extended beyond subprime. According to the Federal Reserve, about one in seven banks has toughened home lending standards even for borrowers with good credit. You'll find lenders stingier on appraisals, more persnickety on documentation and far less likely to finance 100 percent. Also, at the high end, rates on the 30-year jumbo (over $417,000) jumped nearly a percentage point between June and September. What to do: If you have an adjustable-rate mortgage, read your agreement to find out when your rate will reset, how high it will likely go and how high it could go. If it's coming due and will end up above 7 percent, consider refinancing to a fixed rate. You'll need 10 percent equity and a credit score over 660. Must buy? Get the best fixed rate you can (rates on a 30-year fixed are currently a sliver above 5/1 ARMs). Home-equity loans and lines of credit What's happening: These are generally holding at about the prime rate, now 8.21 percent if your credit score is above 680 and you can prove income. But you can't tap 100 percent of equity anymore; you'll be lucky to get 80 percent. What to do: Just because you can get a home-equity loan or HELOC doesn't mean you should. Home prices are falling nationwide, and you don't want to borrow against shrinking equity unless it's the cheapest way to finance a necessary purchase, such as college or medical care. Credit cards What's happening: Hurting from subprime exposure, banks are looking to increase revenue. Coincidence or not, credit-card terms are slightly higher. Intro offers have gone from 12 months at 0 percent to three months at 1.9 percent and up, says Curtis Arnold of CardRatings.com. And issuers are increasingly triggering rate increases, he adds. Discover, for example, hiked its highest-risk customers from 17.99 percent to 18.99 percent. What to do: Now more than ever, pay on time and check your bill to be sure your APR hasn't risen. Auto loans What's happening: Car loans have hovered for the past year around 7.4 percent, with highs of 25 percent for those with poor credit. So far these have been impervious to the crunch, says Chintan Talati of Edmunds.com. What to do: You may be tempted, as in the past, to use a tax-deductible HELOC to buy a car, but think twice. Real estate is unstable, it's harder to get prime on a HELOC and paying it back requires discipline. If you can get a 7 percent to 8 percent auto loan, take it. http://biz.yahoo.com/hmoney/071001/1....v=1&.pf=loans __________________ Should You Email Your Members? Link1 \| Link2 \| Link3 Enough Said. "Would you rather live like a king for a year or like a prince forever?"

10-01-2007, 05:01 PM	#2
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	That article gives support to the notion that even the Fed's recent rate cut wont dampen the industry trend towards tighter credit... __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

10-02-2007, 02:15 PM	#8
StickyGreen . Industry Role: Join Date: Oct 2003 Posts: 13,076	Buy real physical gold... __________________ Refer Cam Girls and Take Home 10% of Everything They Make For Life

10-02-2007, 02:34 PM	#9
sniperwolf Too lazy to set a custom title Join Date: Mar 2005 Posts: 17,743	So true! Nice Article. __________________ ~Accepting design works~

10-02-2007, 03:01 PM	#10
over38 Confirmed User Industry Role: Join Date: Aug 2002 Location: USA Posts: 460	I just closed with a no doc loan, no problems at all __________________ Mainstream Blazing Fast SSD WordPress Hosting As Low As $4.97/month! USA Based Support !

10-01-2007, 05:15 PM	#3
fuzzylogic Confirmed User Join Date: Jun 2004 Location: buffalo, las vegas. icq: 285808879 Posts: 4,796	thx for the post