The interest rates for home mortgages and remodeling have recently jumped about 8/10 of a percent from early July to mid August. These rate jumps have been for homes over $417,000, or the custom homes. These are also Fannie Mae and Freddie Mac loans as well.

In some markets like Los Angeles, New York and Washington, these are not high-end expensive homes.

Some buyers are doing more shopping around for a mortgage loan. And sellers are doing some creative pricing as well. The smaller `conforming loans' have a better interest rate, but what was the low a few months ago had a difference of .17 wide gap. Now the gap is .77 between the 2 interest rates.

At the current gap a $500,000 home mortgage over 30 years fixed rate could end up costing $3804 a month in a payment. This is $340 higher than 2 months ago. Experts agreed this would hurt sales of homes.

One California County saw home sales drop 25% in 2 months. Typically home prices go up not down. However the summer of 2007 has seen a downturn in sales prices about 2.9% and the 2008 estimate in some areas, are looking like a 5.7% loss in sales prices. The national Association of Realtors, reports a 10.8% drop in home sale price in the past 12 months.

These numbers are making homeowners look more at remodeling the existing home.

Other moves include some sellers doing an interest rate `buy down' of 2 points in the first year and 1 percent in the second year, to try to make up for the lost numbers of sales.

Some buyers are using this higher interest as a `bargaining chip'. They are using the rate to do some negotiating. Some buyers are trying to get thousands of dollars knocked off the sales price because some homes will now have the multi thousand-dollar higher mortgage payment.

Brokers and sales agents are telling prospective buyers that mortgages are still available if they shop around, but there are fewer lenders out there making those $450,000 loans.

Mortgage brokers and real estate executives are telling their buyer that if the credit rating is good and if they can verify assets, there is still money available. The word is a 7% interest rate can still be found on a $450,000 home if the buyer will find a lender who is trying to "boost the market share."

A New York broker says that it is almost looking like 2 financing markets.

Finding the right lender and loan package can be a real chore because the numbers change almost daily. Added to this, Wells Fargo is offering better rates to `in house' originated loans than to the ones written by mortgage brokers.

Local banks and savings and loans locally are now funding many more loans. Some buyers are putting 20% down payment on a $600,000 loan, and then taking a regular jumbo loan and an additional home equity loan to come up with the full purchase price. The 2 buyers in question were college professors with awesome good credit.

Other buyers are setting closing dates 60 days forward, hoping rates will come down.

Also the lender's appraisal QA departments are going over the appraisal reports with a fine toothcomb. Additionally, a lot more time is going into the paper work, or loan preparation documents. A case of buyer's remorse is killing deals right and left due to the higher payments. Also the higher down payments are eliminating some buyers who have issues getting cash out of assets.

Other buyers are looking at paying points up front. If you plan to live in your home 5+ years, the savings in the monthly payment will be recovered from the points paid. The 6th year, a lower payment will obviously be a boon with inflation.

Remodeling with a home equity loan has some more advantages. Your current lender will not likely require a credit check, or title search. This definitely saves money on a refinance.

When you refinance, there may well be some cash in the bank that was not there before. Now look at credit card balances. Mortgage interest rates can go down as the interest rates go down as treasury bonds have fallen. But credit card interest rates could be 38% or higher. This pay off could put a lot more money in the bank in the form f money you save on those credit card payments. Here is how to finance a home building or remodel,