For a good part of last year, the financial markets moved up and down based on whatever was happening in Europe. The problems there aren’t fixed, but this has moved firmly to the backburner as all the attention now is focused on our own political issues. We have been muddling along and the US economy has been slowly but steadily improving, and unemployment has slowly but steadily been dropping. The biggest crises we have now seem to be of our own making. We came into the New Year courting disaster, and ground the brakes down to dust as we stopped just short of the fiscal cliff. The agreement didn’t really end anything though, it just forced a break in the action so the two political parties could re-group for the next battle. For our next crisis, we are bumping up against the debt ceiling again and this will have to be extended sometime in the next month or the Government will run out of funds to pay it’s bills. The last time this happened, the President and the Republican led house came to an agreement at the last minute, which basically kicked the can a little further down the road. But the process was so ugly and the dysfunction was so obvious that bond rating agency Standard and Poors downgraded the credit of the United States. That turned out to be less of a problem then expected, since we were still head and shoulders above the rest of the world, and investors continued to bid for our debt in spite of the downgrade. But as we approach round two, businesses and financial markets face more uncertainty, which means more caution in committing to anything. Chances are we will get past this crisis intact, too, but lurching from disaster to disaster without solving anything or making any real changes seems to be our way of governing now. You wonder how much better off we would be if both parties tried working together for the common good, for a change?
We are still dealing with the effects of the housing bust, and this last week, they just came out with the new rules for the Qualified Residential Mortgage (QRM). The idea behind this is to set a standard, which all banks and mortgage lenders will abide by, of what a safe and sustainable mortgage is. In a way, this is closing the barn door long after all the horses have all gone, since underwriting now is much tighter than it was before and all the crazy loan products that helped fuel the crisis have been abandoned, along with the demise of most of the riskiest lenders. These new rules will go into place next January, and this is another form of tightening, since many borrowers who can qualify for mortgages under the current, already tight, guidelines, may not be able to qualify for mortgages once the QRM guidelines are in place. The good news though, is it could have been worse. Many projections expected the QRM to focus on down payments and to force higher down payments. This would be a big problem for younger, first time home buyers who struggle to save enough to buy a home. Instead, the guidelines focused on affordability. Balloon mortgages have been all but outlawed (they are a very small part of the market now) Adjustable Rate Mortgages have to be qualified by the highest payment rather than the introductory rate, and in most cases the highest debt ratio allowed will be capped at 43% of a borrower’s income (this includes the mortgage payment and all other debt). It is this last provision which is likely to have the biggest effect on buyer’s qualification. This sounds like a logical way to keep people from overextending themselves and buying more of a house than they can afford. But in reality, we often lower the amount of income we can use for qualifying and borrowers often have more cash available than what we can use in the guidelines. So we can often go much higher in the debt ratio, while still making sure they are safely able to afford the loan. Setting a hard and fast arbitrary limit takes away the flexibility that is currently in the system, and will hurt some otherwise qualified borrowers. There will be a provision, still being worked out, which will set a separate class of mortgages for those going over the ratio, but if this is viewed as a bigger risk for the mortgage lenders, they are apt to ignore this entirely, and stick to the safer ground. We have a year for them to come up with all the details, but at least the industry now knows what to expect.
FHA is also coming up with some big changes soon, but we will cover those later.
These are the current Chicago Illinois Home mortgage rates for an A+ (740 Fico or above), full doc single family home purchase or rate/term refinance on a 45 day rate lock, with 0 points, and no origination fee, best FHA rates assume a 640 Fico score, but loans are available with credit scores as low as 580. Mortgage rates in other states may be slightly different, give me a call and I will give you an accurate quote for your particular situation. The conventional and FHA rates are based on the highest conforming loan amounts, which give the best pricing. Again, there are many factors which affect mortgage rates and your ability to be approved for a loan, including credit scores, property type, amount of down payment and a number of other factors. These rates may not fit your situation and this is just a sample of the programs that are out there. If you would like a quote for your personal situation, or to get pre-approved for a mortgage, give me a call or contact me (Illinois mortgage company) and I will take the time to find the rate and program that is best for you:
Conventional loans up to $417,000
|30 year fixed rate
|15 Year fixed Rate
For Jumbo loans over $417,000
|30 Year Fixed Rate*
||Call for options for your situation
*(Another option is to break your Jumbo loan into 2 parts a conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)
FHA LOANS 3.5% down payment FHA Maximum varies by County
|FHA 30 year fixed
||3.50% with 0Pt
|FHA 30 year fixed
||3.375% with 1 Pts
|FHA 5-1 ARM
||3.00% with 0Pt
|FHA 5-1 ARM
||2.75% with 1 Pts
FHA APR reflects 3.5% down payment and the effect of mortgage insurance on the loan. Call for information on no-cost FHA streamlined Refinances
FHA 203K Rehab Loans – Call for Current Quote – FHA 203k Rehab and Renovation loans are now available as 30 year fixed or 5-1 ARMs.
VA Veterans Administration 0 Down Loans
|VA 30 Year Fixed Rate
||3.50% with 0Pt Origination
|VA 30 Year Fixed Rate
||3.375% with 1.00 Pts
These are just a few of the mortgage programs and mortgage rates available. Which option is best for you depends on your own specific goals and needs. If you have any questions or want to go over your situation in depth, let me know how I can help.
You can trust in us to get the job done.
Peter Thompson 630-479-6424
Illinois Mortgage Rates First time home buyer loans
Chicago Mortgage Company Chicago FHA Mortgages