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Oct 3, 2008 7:59 pm US/Eastern
Will Bailout Mean Better Credit, Mortgage Rates?
Financial Expert Tells CBS 2 HD The First Telltale Signs Will Be What Happens With Student, Auto Loans
NEW YORK (CBS) ―
With predictions that the bailout will loosen up what's become an extremely tight credit market, what will this mean for the average person just trying to get a loan or a better mortgage rate?
CBS 2 HD has one Long Island family's story.
Sal Sangeniti is a father of two, a lifelong New York City employee and he's just about to lose it all.
"I picked up a second job, I sent my wife back to work," Sangeniti said.
When the mortgage on Sangeniti's home started adjusting upwards, the 24-year veteran of the FDNY couldn't afford the payments on his home and his credit cards.
"From $3,000, it went to almost $5,500 in two years time," Sangeniti said.
The $2,500-per-month extra he was paying on his now 14 percent mortgage was meant to go to his credit cards. And while he was able to pull the house from the brink of foreclosure, it's a different story on the credit cards, which soared to a 27 percent interest rate.
"Unfortunately, I have to file for bankruptcy," Sangeniti said. "I definitely got caught in the credit crunch, definitely."
The Sangenitis of the world are hoping the congressional bailout will mean a helping hand for regular men and women. Kelli Grant of Smart Money magazine said the first positive sign will be seen in student and auto loans.
"You should see lenders try to get back into those marketplaces and lower rates and really be more generous who they lend to," Grant said.
Grant said mortgages are still uncertain though because it's reflective of a housing market that has not stabilized.
"They're certainly going to be a lot more cautious, more restrictive higher rates but it should be much better than it is now, too," Grant said.
As far as what got most of us into Sangeniti's situation, he said it was what used to be known as chasing the American dream.
"It wasn't to live high off the hog, it was to live a normal middle class life and that's where it became an issue," he said.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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