If you’ve followed the financial news lately you’ve probably heard some rumblings about how companies like Standard & Poors, Moody’s and Fitch have updated the way they value and rate subprime mortgage securities held by investors.  The changes in their valuation models have drastically reduced the value of the loans that make up these securities sold and traded on Wall Street.

This new model has made many of the loans that are held by investment banks, hedge funds, pension funds and overseas investors worth 50 or 60 cents on the dollar.  A huge loss by any measure. 

What does this mean to you and your mortgage loan?  It means a couple of things. 

• If you have credit that is less-than-perfect (below a 640) you will find it harder and to secure financing.
• 100% financing options are now only available to the highest-credit borrowers.
• Interest rates are much more costly the more money you borrow against your home.
• Some programs that you may have had access to in the past are no longer available (e.g. subprime 2^nd mortgages and now 2-year ARMs)

As the money available for financing becomes more scarce it is important to evaluate your current mortgage situation and determine if you need to refinance out of an existing loan or make some other change (such as a home sale or reduction in monthly debt).