Mortgage rates have risen about a half a percentage point over the past five weeks, according to mortgage research firm HSH Associates' latest survey.

• May 23, the average conforming 30-year fixed-rate loan was 6.02 percent; last week it was 6.55 percent.

• The average jumbo loan May 23: 7.12 percent; last week, 7.65 percent.

The average 5-1 Adjustable Rate Mortgages (ARM) -- conforming and jumbo -- also jumped a half a percentage point.

What's going on? Fear of inflation is driving this increase. Right now, we are technically STILL not in a recession. The economy is barely alive. With that as a backdrop, the Federal Reserve announced it was no longer likely to cut interest rates -- and that, in fact, it may start raising rates sooner rather than later for fear that inflation will get out of control.

With that in mind, what are Americans to do? We have advice for buyers, sellers and holders-on.

If you're buying:

• Down payment is a must. We got used to zero money down. Today, the minimum for a Federal Housing Authority (FHA) loan is 3 percent. You'll do better in most marketplaces with 5-10 percent. Most challenged housing markets are asking for 10-15-20 percent down. More is better.

• Credit score over 720. That's what you need to get the best rates in the marketplace. You can find financing with a lower score, but you'll pay more. Right now, according to myfico.com, on a 30-year fixed-rate loan, the following score nets you the following rate, which translates into this monthly payment on a $300,000 loan:

760-850: 6.179 percent: $1,833

700-759: 6.401 percent: $1,877

660-699: 6.685 percent: $1,933

620-659: 7.495 percent: $2,097

• Document your income and assets. The days of liar loans are over. Today, you have to prove you are the borrower you say you are. During the days of free-flowing money, lenders were willing to allow the total debt you were carrying to creep up to 55 percent of your income. Today that number is 43 percent, which argues for getting pre-approved for your loan so you know what you can REALLY afford.

• Really, really shop around. Last week, the low quote on a 30-year conforming loan from HSH.com was 5-7/8 percent -- the high was 9-1/2. What that means is that if you want to get the best deal possible for you -- you need to shop around. Traditional mortgage lenders and bank-owned mortgage companies are going to be the best play for anyone who wants a traditional conforming loan, one that can be packaged and sold to a Fannie Mae or Freddie Mac. But, if you're still looking for something special -- to not document your income, for example -- you will need to deal with a lender who keeps the loan in its portfolio. Look at credit unions, small- and mid-sized banks and thrifts, and mortgage brokers -- but only those mortgage brokers who have been through these ups and downs before. You want/need a seasoned pro. And finally, if you're buying and you're one of these non-conforming cases, have a second deal ready to go in your back pocket in case the first one falls apart.

If you're a seller:

• Adjust your expectations. It was the reverse three years ago. The market came to you. Today, you need to be realistic about what your house will sell for. And by all means get out of the first property before you agree to buy another. Bridge financing is tough to come by.

If you have an ARM:

Chances are if you have an ARM that either reset this spring or is just resetting now, you're looking at the rate going down rather than going up. Now is not the best time to look at refinancing out of your ARM, because you'll pay more on the fixed-rate loan than you are on your current loan. But don't get complacent. Your rate may have gone down this year -- chances are it will go up next. So if this year's monthly payment is less than last year's, take the difference and sock it into a savings account. That way you'll be able to handle bad news that comes in 2009.

Q: Last question: Is there any good news?

A: The one piece is that home prices have fallen -- in some places to 2003-2004 levels -- which offsets these gains in mortgage rates. You may be able to find such a good deal in your area that your out of pocket cost would be less than it would have been if you bought a more expensive home with a cheaper loan. The key is to lock into that good location now ... and wait for a chance to refinance when the business cycle turns.

Jean Chatzky is an editor-at-large at Money Magazine and serves as AOL's official Money Coach. She is the personal finance editor for NBC's "Today Show" and is also a columnist for Life Magazine. She is the author of four books, including 2004's "Pay it Down! From Debt to Wealth on $10 a Day" (Portfolio). To find out more, visit her Web site, www.jeanchatzky.com.

Copyright 2008, United Feature Syndicate, Inc.