Interest rates nudged up only slightly over the past week, according to the new Freddie Mac Survey. The average cost for a 30-year fixed rate loan is 6.46 percent, with .50 percent in fees. The average cost for a 15-year loan moved up to 6.15 percent, also with .50 percent in fees.

These rates are virtually unchanged from a year ago. What’s interesting is to get these interest rates, you need a significantly higher credit score than you needed last year. Instead of qualifying with a 720 credit score, you might now need 760 or 780.

You can thank the credit crunch for this one. There’s plenty of blame to spread around.

I received an email last night from a guy who is putting 100 percent of his take-home pay toward two mortgages. He owes $1,900 per month on his primary residence, and another $1,500 per month on a rental property (monthly rent is $1,100 per month, and he has a negative amortization loan). He bought the rental property for $237,000 and he is now trying to unload it (without success) at $200,000.

This guy is heading for bankruptcy court or a “deed-in-lieu.” Did he make a bad investment? Yes. But no self-respecting lender would have allowed him to get in so deep. The only answer is that the lender had a huge payday and couldn’t resist the temptation to line his pockets.

September 6, 2007