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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. 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.
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