The mortgage mess is about to get messier, said Joe Bel Bruno in the Associated Press. In the next several months, about 2 million adjustable loans will reset to a higher rate. How much higher? Domenico Colombo, a homeowner in Fort Lauderdale, recently realized that the monthly payment on his adjustable-rate mortgage was about to balloon by 30 percent—an extra $1,500 a month. Although Colombo managed to refinance and thinks he’ll be all right, “the future is less certain for the rest of us.” The mortgage crisis may force some people out of their homes, depressing housing values even further, and “might also spiral throughout the economy.”
If you haven’t yet felt the credit crunch, just wait, said Kathy Chu in USA Today. “More of us will find it harder—and costlier—to borrow money.” Many will also see the value of retirement savings sink as the fallout from the housing bust spins its way through the rest of the economy. With housing gains and easy credit no longer subsidizing their income, consumers will have no choice but to tighten purse strings. “Even those with pristine credit aren’t likely to escape the spreading credit crisis.” Credit card lenders, for instance, are lowering limits across the board. Meanwhile, credit bureau TransUnion’s TrueCredit.com division “has begun recommending that consumers maintain a credit score of at least 680 to qualify for prime rates.” Previously, the required score was 650.
For homeowners, the housing downturn has at least one upside, said Sara Lin in The Wall Street Journal. If you’re looking to renovate or build a home, you’ll likely have no trouble finding qualified labor and discounted materials. “The housing slump has pushed down prices on everything from lumber and drywall to labor and design fees.” Carpenters, landscapers, and other contractors are offering discounts to avoid lying idle, and “architects are taking on small renovation projects they once would have sniffed at.” That said, be wary of prices that seem too good to be true, even for this market, says Deborah Pierce, an architect in Newton, Mass. “If somebody’s low-balling it, they’re probably cutting out something that’s important,” Pierce says. “You need to know what it is.”
