Mortgage Meltdown

(CBS)  Subprime mortgages are affecting the stock market in big ways. Ray Hennessey, Editor of SmartMoney.com, weighs in on why these mortgages are affecting many more people than you may think.

Sellers beware; subprime mortgage woes may affect how much homes will be going for in the near future. According to Hennessey, it's a matter of supply and demand. "I've heard estimates today of 25% in terms of home values going down just because... it would be a stretch for [people] to buy the house," says Hennessey.

Banks are worried too. Because banks may be less likely to extend credit to people, it can affect an individual's ability to get a credit card. "If you're in the market right now and trying to get a credit card, expect to get either a very high interest rate... or be denied," says Hennessey. The American public isn't used to that. Due to recent low interest rates, people are used to being able to get credit wherever they need it, be it for a store credit card or a car loan.

And if you're looking to get a loan for that car purchase anytime soon, you may have to wait, or look for a less expensive car. Hennessey thinks it's not unlikely that we'll soon see a tightness in loans. "You're going to see that things that you've gotten used to over the last five, six years, you can't have access to," says Hennessey. That can adversely affect the consumer psyche, and in turn, affect purchases.

Hennessey says that unless you have the money saved up for major purchases, like a house or a car, you may have to wait to buy until the subprime meltdown cools a little. Or, lower your standards on what type of house or car you're trying to buy.

For more information on subprime mortgages and other financial advice, click here.
By Erin Petrun