You should care about what's happening in the sub-prime market. There are headlines everywhere and predictions aplenty, but if you are not a sub-prime borrower you probably think it has no affect on you. But you should be aware of what's happening… A sub-prime loan is a loan for people with less than perfect credit or for those who simply don't qualify for a prime (A-paper) loan for a variety of reasons.

The Senate Banking Committee held hearings recently on the crisis in the sub-prime mortgage lending industry. As a home owner or prospective buyer, you need to know how the sub-prime mortgage meltdown will affect you.

1) As a homeowner, even if you're sitting pretty with your 30-year fixed rate mortgage on your home, this sub-prime lending mess could have an adverse impact on the value of your home. You're at a disadvantage. Remember, the rules for obtaining sub-prime loans have tightened. That means fewer sub-prime borrowers will qualify. That means fewer qualified buyers in general.
A recent study shows that about 1 in 5 sub-prime mortgages will go into foreclosure. And whether that foreclosed property is across the street, or simply in the same neighborhood, that is not going to reflect very well on your property value.
The Center for Responsible Lending estimates that one foreclosure in the neighborhood lowers the value of nearby single-family homes by about 1 percent. So, if there are 10 foreclosures in your area, you're talking about 10 percent dip in your home's value.

2) If you're in the market to buy a home, you're at an advantage. Sellers are becoming very competitive with each other since there are more houses on the market. Prices have even come down in some areas depending on the availability of homes. That means you may be able to score your dream home at quite a bargain.
If you do have good credit, a 30-year fixed interest rate loan may be very attractive at around 6 percent. If you don't have good credit however, you may find it more difficult to qualify for a loan.

3) If you are selling your home, it used to be that securing credit for just about anyone was easy, but those rules are changing. Lenders are continuing to tighten their guidelines, so there may be fewer borrowers who will qualify for a mortgage, and that means that fewer people will have the means to buy a home. That means if you want to sell your home, you need to price it right. You may also have to market your home more aggressively. Make low-cost improvements that can really help to sell your home like sprucing up the backyard or adding some fresh paint to the exterior. Refer to my article on home improvement in March for more detailed tips or contact a local Realtor for specific advice relating to your home.

4) If you're in the market for a mortgage, it's more important now than ever that you find a mortgage lender with whom you trust and feel comfortable. If you have good credit, you'll find that rates are in your favor. That's because there's a real demand now for homeowners who can make their monthly payments.

If you are shopping for a mortgage, don't fall for promises that seem too good to be true. The day of "low-low" rates and no money down loans are quickly evaporating.

If you would like to learn more about your existing situation, please call Jeff Kutnick from First Rate Lending at 949-215-9400 or email him at jkutnick@firstratelending.com or visit www.firstratelending.com