Illinois Mortgage Rates and News

Illinois Mortgage Rates – Rants, Raves and Consumer Education from a long time Chicago, IL Home Mortgage Banker.

Peter Thompson - Illinois Mortgage Broker
Illinois Mortgage Broker
Peter Thompson

Prospect Mortgage
NMLS # 283204
Direct: 331-333-7093
Cell: (630) 479-6424
Fax: 877-773-1476
1717 Naper Blvd., Suite 300
Naperville, IL 60563
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The Benefits of Having a Larger Down Payment

4th September 2014

Consumers face many decisions when looking to purchase a home. One of these many decisions include how large of a down payment to put down. Theirimage down payment is the sale price less the loan amount. In the vast majority of cases, the potential home buyers must have their financial assets, at a bare minimum, be as large as the down payment they will make. Many consumers, despite having the capacity to put down more, put down as little as they can because they view a down payment as a loss instead of looking at it as the investment that it is. The nice thing about down payments is that the return on investment is 100 percent risk free. It is an investment that yields a return far surpassing anything else available to consumers.

For Example:

If Bob is planning on purchasing a home for $200,000 financed, a mortgage of $190,000, priced at 4.25 percent and 1 point, his down payment of $10,000 is 5 percent of the price. He’s retaining another $10,000 in a money market fund currently yielding him less than 1 percent. However, if he uses that $10,000 instead to increase the down payment to 10 percent or if he can save that amount before the deal is made, his rate of return will be 7-8 percent, which would depend on how long he keeps the mortgage not to mention, there is no risk involved.

Where does the yield come from on a return derived from loan elimination? Part will come from the elimination of the $10,000 of mortgage loan on which he’d pay 4.25 percent and 1 point. He’ll retain the points and interest on the $10,000 he doesn’t borrow. If he keeps the loan for seven years, the component of the return is 4.43 percent. This may sound like a complicated concept but in reality it’s actually pretty simple. When you invest $10,000 in a security, your return is the interest paid to you by the security issuer. If you invest $10,000 in a down payment, the return will include the points and interest you do not have to pay the lender on the $10,000 you do not borrow.

If we take a $190,000 loan with 5 percent down (let’s assume the borrower has very good credit) the monthly insurance premium is around $85. Now if we take an $180,000 loan with 10 percent down, the premium would be around $58. This reduction will increase the rate of return on the investment of $10,000 down payment to around 7.88 percent.

With a larger down payment, why would loan costs drop? Well, the answer is simple: The bigger the down payment, the lower the risk to the lender. So, if the borrower does fault, the likelihood that the debt would surpass that of the property value will be much less with a bigger down payment. Usually, a higher down payment shows that the borrowers are probably less likely to default as they demonstrated a budgetary discipline with their ability to save funds.

Simageaving for a down payment will be different depending on when you are looking to purchase. Potential borrowers who are actively looking and plan to purchase a house soon will base the decision on their current financial assets.  Potential borrowers looking ahead to the future (where they’ll hopefully be in a better financial situation) need to develop a savings plan. In planning ahead, they should assume that the return they will earn on the savings is 1.5 times the home mortgage interest rate. (A conservative estimate of the rate of return on the savings when used as a down payment)

If you have been planning to purchase a home but have been unsuccessful at saving, it’s time to start now. If you typically view saving as a sort of residual thing, as in whatever remains unspent at the end of the month will be saved, then in doing this you are making saving the lowest priority and will find it quite difficult to reach your goal of purchasing a home.  The number one secret to successfully saving is simply making it the highest priority in your budget. You’ll need to sit down and decide how much of your income you’ll be able to afford to save and create a separate account solely for this purpose. Then immediately after you are paid, write a check out for that amount and deposit it into the account. If you have the ability to set up an automatic deposit of this amount into the account with each paycheck, then that’s even better. You’ll be surprised how quickly your dreams of homeownership become reality when you make this your number 1 priority. If you have any questions, would like a quote or to get pre-approval, give me a call and let me know how I can help.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

Posted in First Time Home Buyers, How Income Affects Mortgage, Miscellaneous, Shopping for a Mortgage, Understanding Your Credit Score | Comments Off




Should you Include your Spouse on an Application?

14th July 2014

When deciding whether or not to include a spouse on an application for a mortgage there are a few things you need to take into consideration. puzzle

Let’s say that you are looking to purchase a $450,000 home and you make $84,000 a year and have a credit score around 800. Your spouse, on the other hand, has a credit score around 680. You also have about $25,000 of financial assets in your name and no debts. Your spouse has $32,000 and zero debt and both of you plan on residing in the home for about 7 years.

When applying for a mortgage jointly, both of your incomes are combined as well as any financial assets you may have as individuals. When combining both assets and incomes, it strengthens your application thus making it more probable that you’ll qualify for the mortgage you’re wanting.

On the flip side, filing jointly will also require that you combine debt obligations from both parties even though they’re carried in their separate names. However, looking at the above scenario, this would not be an issue but for some people it definitely can be.  In addition to combining debt obligations, the lowest credit score will be used when pricing the loan and this would be a problem in this scenario.

imageWhen making this decision you need to look at the implications of qualification and pricing as separate matters. In regards to qualification you either qualify or you do not. If the only way to qualify for the loan is, in fact, to apply jointly then it looks like you’ll be doing just that because there’s not much to consider. However if you can qualify on your own you might still decide to file jointly if by doing so, you reduce your cost.

Looking back at our scenario filing singly, with 5 percent down and a credit score of 800 you would qualify for a 30-year fixed-rate loan and a 5/1 adjustable-rate loan. You would not, however, qualify for a 15-year fixed rate loan since the larger payment would bring your debt-to-income ratio to 49.9 percent, which exceeds the maximum ratio of 43 percent.

Filing jointly in this situation would allow you to qualify for all three mortgages which would include the 15-year. This should only be taken into consideration if you want the 15-year which would actually save on interest but would increase your payment.

If you are able to qualify singly or jointly your decision can be based on whichever one results in a lower cost. Your costs are measured over the seven years you expect to be in the house. The costs would be measured over the seven years you would plan on staying in the house. Here’s what the costs are broken down: upfront fees as well as charges, mortgage insurance and monthly payments, and interest loss on upfront and monthly charges, less tax savings and balance reduction. On a 30-year fixed-rate mortgage filed jointly would be $100,499 where as if you filed singly it would be 112,634. The difference in cost on a 15-year fixed-rate mortgage would be about the same.

Filing jointly would save you money in this situation since the second spouse had enough assets in their name to increase the size of the down payment from 5 up to 10 percent. The reduction in cost from having a bigger down payment drowns out the increase in cost from having to use their lower credit score.

A loan officers focus in guiding you through the process will be on whether or not you qualify rather than pricing. If you can only qualify one way, than that is the way you’ll be guided. If you can, however, qualify either way, then you’ll want to use the option with the lower cost.

Filing jointly inevitable means a lower credit score, thus raising the price. This decision should only be made if the spouse with the lower score has enough financial assets to increase the down payment and therefore lower the mortgage cost. Keep in mind though that the increased down payment has to go past a pricing notch point: 5 percent, 10 percent, 15 percent or 20. For example, an increase to 9 percent from 5 would not help but going from 9 to 10 percent would.  If you have any questions, would like a quote or to get pre-approval, give me a call and let me know how I can help.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

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Average U.S. Mortgage Rate Drops This Week

30th May 2014

The average rate for a fixed mortgage in the U.S. fell, yet again, this week making it the fifth week in a row for the drop. Although the home-buying season for spring has gotten off to a slow start, the low rates might just help.For Sale

On Thursday this week, Freddie Mac said that the “average rate for a 30 year loan came down to 4.12 percent from 4.14 percent last week. On a 15-year mortgage, the average rate dropped to 3.21 percent from 3.25.

With Spring in full swing, the warmer weather actually has yet to increase home sales as it usually does. The higher interest rates and rising prices that began mid-2012 made home sales an unattractive market for potential home buyers. However, we find that there are actually less homes with available to purchase with new construction redirecting their focus from single-family homes to rentals.

The price of the average U.S. home went up in March but the gains are declining as the number of would be home buyers able to afford to purchase a home goes down. More Americans signed purchase contracts in April than in March but the average pace of home buying is still less than that of last year according to the National Association of Realtors.

The rate increase over the past year or so was partially driven in by the speculation that the Federal Reserve would reduce its bond purchases, which have helped ensure that the longer-term interest rates remain low. Since December the Federal Reserve has declared four declines in its monthly bond purchases since the economy appears to be healing but so far they have no plans to increase their benchmark for short-term rates from record lows.

Federal Reserve Chair Janet Yellen informed Congress that the economy is in fact healing but the job market continues to be poor. She also said that inflation is still well below the Reserves target rate and expects their near-zero target for short-term rates to remain appropriate for a while after the bond purchases end.

Freddie Mac takes survey of different lenders across the country between Monday and Wednesday each week in order to properly calculate the countries average mortgage rates.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

Posted in First Time Home Buyers, Illinois Mortgage Rate Weekly Update, Illinois Mortgage Rates by Community, Miscellaneous | Comments Off




New Welcome Home Illinois Program for First Time Chicago Area Homebuyers

22nd May 2014

Pete and Govenor QuinnGovenor Quinn came to Aurora Friday May 16th, 2014 to the recently purchased home of Ryan and Jessica Chrisman-Denegri to announce his newly launched “Welcome Home Illinois” mortgage loan program for first time homebuyers and to congratulate the new homeowners. Ryan and Jessica were among the first buyers to close under the new program.  

Pete at Podium Up CloseThis new program from the Illinois Housing Development Authority is being rolled out just in time for the spring market. The Welcome Home Illinois program provides homebuyers with a $7,500 grant to use toward their down payment, and a below market rate on a 30 year fixed loan. The program assists buyers with the cash needed to become homeowners. You must be a first-time homebuyer to qualify. The home must be purchased in the state of Illinois, must be a primary residence purchase only(no refinances), must contribute 1% or $1,000 of the purchase price(whichever is greater), buyers can purchase a 1 or 2 unit property, and income and purchase price limits apply. Prospect mortgage is one of the few lenders authorized by the Illinois Housing Development Authority to offer this program.

This really does look like a great program for those who qualify so contact me today for a quick pre-approval so you can start looking for your future home. click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

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Do the Benefits of Buying Outweigh Renting?

9th May 2014

According to the first quarter Zillow breakeven horizon analysis, in over half of the metros areas in the U.S., purchasing a home is a better decisionFor Sale Sign financially than renting for those homebuyers who plan on residing in their home at least two years. During this first quarter 35 of the largest metro areas where analyzed.  The following cities had the shortest breakeven horizon: Miami –Fort Lauderdale (1.2 years), Tampa (1.1 years), Orlando (one year), and Riverside (less than one year). The cities with the longest breakeven horizon included: Minneapolis and Baltimore (both 3.1 years), San Diego (3.2 years) Phoenix (3.3 years), Boston (four years), and Washington D.C. (4.2 years).

For Rent SignSince there are many varying factors for buyers within the same city, Zillow makes breakeven horizons down to the neighborhood in order to give potential homebuyers as well as renters the most accurate information in regards to the specific area in which they are looking at living in. As an example, if we look at San Francisco, the breakeven horizon is 2.8 years, however, potential homebuyers looking in the Bayview neighborhood will break even after 1.4 years. On the flip side those potential homebuyers looking to purchase a home in Presidio Heights would need to stay in their home 11.7 years in order for buying to be a better option.

Some renters still have to overcome significant hurdles before they can pull the trigger on homeownership. For those renters who can’t qualify for a mortgage or aren’t able to save enough for a down payment on a house, renting can be a more flexible, and often far less frustrating option,” said Zillow Chief Economist Dr. Stan Humphries. Who goes on to say, “Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it. Many renters ask themselves why renew a lease, when you can break even on the same home in less time in many areas”. If you have any questions, would like a quote or to get pre-approval, give me a call and let me know how I can help.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

Posted in Miscellaneous | Comments Off




How to Keep Your Credit Score Up

24th April 2014

Most of us know that skipping payments, paying late, or filing for bankruptcy are some obvious ways to destroy your credit. On the flip side of this, thereCredit Card are also some much more subtle and often overlooked things that borrower’s do that can damage their credit scores just the same. These things can in turn trigger a downward spiral of financial consequences that range from loan rejection, to higher interest and insurance premiums, to having to shell out a much higher security deposit.

One of these subtleties is when shoppers are drawn in by too many in-store credit offers. Like the ones that would make a promise of 10 percent or more off of your purchase just for signing up. First of all, creditors may view these people who are opening so many accounts in such a short time frame as being in financial trouble. Subsequently, opening up that much credit could potentially hurt you credit scores which fluctuate by the average length of time on each account. “The older the accounts, the better”, said John Ulzheimer, credit expert with CreditSesame.com and formerly FICO. “So if you’ve just added a bunch of accounts, you’ve made your credit report look younger, maybe a lot younger. It takes time for those accounts to age, and the average age of you credit history to grow again. My suggestion for people who want the in store-discount is to think about the downside, especially if you want to go out and buy a home or a car. You’ll be in a higher interest rate tier.”

High credit card debit is another thing that potential creditors do not like to see when they’re looking at your credit report. “Many people think that if they make payments on time, they’ll have good credit,” Mr. Ulzheimer said.  “The main problem with credit card debt is a high-risk type of debt,” he said. “It’s not secured bu an asset like a home or a car. So if you have as little as $10,000 in credit card debt on card that are maxed out, you’d be surprised how low you credit sores can be, even if you are making payments on time. The good news is if you pay the debt down, your scores will improve in a short period of time.”

Another thing that can affect your score is taking cash advances and making the only the bare minimum for your credit card payments. Either of these things can signal that the customer is under financial stress and is therefore at a higher risk for default. “Believe it or not, there are certain credit card issuers that will hold certain types of transactions on your credit card against you”, says Mr. Ulzheimer. “People who have poor credit and take cash advances generally run into the most trouble. Car issuers are already looking at them as high risk. They are already on a short leash.” The issuer of the card may then react by closing the account at renewal, cancelling the card, or suspending the credit line. Any one of these can definitely hurt your credit score.

Co-Signing for a loan is often overlooked as something that can really cause some credit problems. In addition to being held responsible for payment in the event of a default, a co-signers credit score will immediately drop upon signing and will definitely plummet if there are any late payments. The entirety of the debt will additionally go on a co-signers credit report which will certainly count against them if applying for credit or a mortgage. “It’s almost like an afterthought that some people willingly put their name on a contract and not really think through what they have just done, “Mr. Ulzheimers said. “When you co-sign for a loan, you might as well be applying for it on your own. The impact is really no different.” If you have any questions, would like a quote or to get pre-approval, give me a call and let me know how I can help.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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

Original Source: http://www.mortgagedaily.com/Consumers/MctCredit032114.asp


 

Posted in First Time Home Buyers, Miscellaneous, Shopping for a Mortgage, Understanding Credit, Understanding Your Credit Score | Comments Off




Alternatives to Low Down Payment for Chicago Area Home Buyers

11th April 2014

Have a young new family? The chances that you have 20% to put down on the purchase of a home aren’t very likely. Without a large sum of money, non-veterans will be heading to the FHA (Federal Housing Administration) for their mortgage, or paying for private mortgage insurance on a conventional loan. Both of these options definitely have their drawbacks one of which being that the fees are substantially high and the hikes in FHA fees have only made the outlook grimmer. Hands holding house

Taking a look at different options and government programs for borrowers without large bank accounts can offer some hope. People who have less than 5 percent to put towards their down payment or people with bad credit probably won’t be able to obtain a conventional loan. So for them, FHA is the way to go. FHA’s mission is to get people with a small savings and bad marks on their credit into a home. FHA will accept a down payment as low and 3.5 percent and a credit score as low as 580. (Many lenders, however, will require a higher score.) One of the many differences FHA borrowers will find is that they can use gifts, rather than money from their savings, to put toward a down payment.

Compared to a conventional loan, the FHA will accept lower income borrowers. “If all your monthly debt payments make up more than 43 percent of your income, you’re probably stuck with FHA, says John Frank, president of Paramount Mortgage in Creve Coeur, MO. On the downside, the FHA fees used to be a lot more reasonable and are now being jacked up. An upfront fee of 1.75 percent is charged per loan which can be financed into the mortgage. Looking at a loan for $150,000, the fee would be $2,625. On 30-year mortgages there’s a 1.3 to 1.35 percent yearly charge adding about $169 to your monthly payment. With fees like that, a conventional loan with private mortgage insurance might be a better option. If you have a good credit score, good income, and a least 5 percent down you can get a conventional loan. Although, borrowers with low down payment may find themselves shopping around in order to find a lender that’s willing.

Borrowers of conventional loans with less than 20 percent down must pay for private mortgage insurance which will protect the lender if they should default.  The price of private mortgage insurance varies with the size of your down payment and your credit score. You are given the option to pay monthly, which would be added to your mortgage payment, or you can just pay upfront. For example, a borrower with a 10 percent down payment and a high 780 credit score would pay 1.27 percent of the loan amount if they paid up front. However, the same borrower with a low 660 score would be paying 2.64 percent. If you decide to pay monthly you would be looking at a payment of about $90 each month for insurance on a $150,000 loan with a 10 percent down payment. Borrowers that pay monthly have an advantage that FHA borrowers do not. They can drop the insurance once amount of the loan drops to 80 percent of the home’s value. This would be a good option for Naperville area home buyers borrowers who are close to having 20 percent for their down payment. If you have any questions, would like a quote or to get pre-approval, give me a call and let me know how I can help.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

Posted in First Time Home Buyers, Miscellaneous, Mortgage Programs, Shopping for a Mortgage, Which mortgage is best for me - Chicago Video Series | Comments Off




Weaker Pending Home Sales May actually be Stabilizing

27th March 2014

In February the NAR (National Association of Realtors) Pending Home Sales Index (PHSI) confirmed a still slowing home housing market. This morning, PHSI showed the eight consecutive month of decline of contract signings.

PHSI is a good future indicator predicting home sales over 30 to 60 days. In February the index was down .8 percent to 93.9 from a revised 94.7 in January. Originally it was estimated that January would show 95.0. This February showed a level 10.5 percent below the index for February 2013, the lowest since October 2011 when it was 92.2.

Sold Home For SaleNAR chief economist Lawrence Yun was optimistic about the import of pending sales data. He commented that he believes the recent slowing of home sales may be in the past while home prices continue to increase. “Contract signings for the past three months have been little changed, implying the market appears to be stabilizing”, he said. “Moreover, buyer traffic information from our monthly Realtor survey shows a modest turnaround, and some weather delayed transactions should close in the spring.”

Looking back to February 2013 all regions are below those levels, however, there was an increase in the Midwest and West. In the Northeast the Index went down 2.4 percent to 77.1 in February, 7.4 percent below last year. The Midwest index rose 2.8 percent to 95.3, still 8.5 percent below last year. In the South, pending home sales dropped to 4.0 percent from an index of 106.3 in January, 9.3 percent below last year. In the West the index increased 2.3 percent bringing the number to 86.1 in February but 16.5 percent below last year.

The forecast for total existing home sales this year are at 5.0 million, which is just below last years, 5.1 million. Housing starts are predicted to increase upwards of 19 percent in 2014, reaching about 1.1 million which is closing to the demand of 1.5 million.

The increase in new home construction will lessen some of the pressure on home prices, said NAR, with the national median existing-home price predicted to increase around 5.5 to 6 percent this year, compared with a jump last year of 11.5 percent.

The Pending Home Sales Index is based on a huge national sample, making up about 20 percent of the transactions for current home sales. In creating the index, it showed that the level of monthly sales-contract activity coincides with the level of closed existing-home sales in the following two months.  In 2001, the first year to be examined, showed that an index of 100 is equal to the average level of contract activity during 2001. In a strange coincidence, the volume of existing-home sales in 2001 dropped to around 5.0 to 5.5 million. A normal volume for the current population of the United States.

 

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

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


 

Posted in First Time Home Buyers, Local issues, Miscellaneous, Shopping for a Mortgage | Comments Off




Some green ways to efficiently boost up your home

7th February 2014

When choosing home improvements to enhance your curb appeal to potential buyers instead of asking yourself who’s the fairest, try asking “Who’s the greenest?” In this day in age, home improvements that boost owner satisfaction and reduce your average utility costs will in turn make your home much more appealing to prospective buyers.Green House

As it turns out, buyers are actually willing to pay up to 10 percent more for new homes certified green, because of the long term savings that will come and in turn this is a better investment, according to the real estate report by Harvard University. Replacing older, less efficient doors and windows would be a great return on investment and sellers would recoup much of the initial cost of the improvement when they sell the home.

Five eco-friendly, money saving, home improvements:

1) Solar Water Heater- Making the switch to a solar power heater can be a big money and energy saver. Hot water solar systems run on the energy given off by the sun. Normally, a traditional hot water system will use 50 to 80 percent more energy than a solar system would, according to Velux America, marketers of solar-powered hot water systems. By using a solar heated system home owners will typically save on their energy costs anywhere from 10 to 15 percent. “While the initial cost of installing a solar-powered system is often higher than installing a traditional water heater, most homeowners find the energy savings allows them to recoup that cost in just a few years," says Jim Cika of solar system manufacturer Heliodyne. "What’s more, homeowners may qualify for a federal tax credit of up to 30 percent of the cost to buy and install a residential solar water heating system."

2) Eliminating Incandescent Bulbs- By the end of 2014, you most likely will not be able to find this type of old-fashioned power-guzzling bulb on the shelves anymore due to Federal law banning them. LED’s and CFL will dominate the market place instead and the on the bright side, no pun intended, you’ll be saving a substantial amount on your next electric bill.

3) Add a Skylight or Upgrade Your Old One- Skylights can be a great energy saver because since they provide a great source of natural light, they can help reduce the need for other artificial light sources thusly bringing down electricity costs. By installing a no leak solar-powered fresh air skylight, one that has automatic rain sensors and solar powered blinds, you’ll be gaining a new source of fresh air and save up to 37 percent on your energy costs, according to skylight manufacturer Velux. Another great thing about this addition is that the cost of these solar powered skylights, blinds, and installation costs are actually eligible for a federal tax credit of 30 percent just for being a green home improvement.

4) HVAC System- Up to half of your total energy consumption, in your standard American home goes to heating and cooling it. EnergyStar says that by replacing an old, inefficient heating, ventilation and cooling systems with more efficient models can exponentially bring down a home’s costs for heating and cooling.

5) Window and Doors- Most people don’t realize the huge amount of air that is lost through poorly sealed doors and windows in both the winter and summer. Upgrading drafty windows and doors to more air-tight models can be a huge savings for heating and cooling costs. In addition to this, replacing doors and windows are among the home improvements that deliver a huge return on investment at the time of resale. You can recoup more than 71 percent of the cost of replacing old windows with new vinyl ones and 73 percent for wooden replacement windows, says Remodeling Magazines Cost vs. Value Report. A new front door could earn you back almost 66 percent for a fiberglass door and up to 85.6 percent for a steel door.

Let us help you get started in the qualification process and click here for our free pre-qualification form.https://www.myprospectmortgage.com/PThompson/prequalify.asp

 

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

Original Source: http://www.nw.org/network/consumers/documents/10SecretsforHomebuyers.pdf


 

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Should Chicago Area Home Buyers get FHA Loans?

14th January 2014

Mortgages with low down payments, the most popular type of mortgage, keeps getting pricier and less appealing as buyers question the worth of obtaining an FHA loan.

On loans backed by the Federal Housing Administration, the mortgage insurance premium has nearly tripled since 2008. Recently FHA changed the rules so that now borrowers must pay for mortgage insurance for the entire life of the loan. House and Money

“FHA loans really used to be a first option for homebuyers with a low down payment,” says Scott Schange, a branch manager for Broadview Mortgage Katella in Orange County California, “Now I see people doing them because they have to and not because it’s their first option.”

The Federal Housing Association allows buyers to obtain a mortgage with a down payment that can be as low as 3.5 %. The underwriting requirements to qualify for FHA loans are general less strict than that of a conventional loan. However, after the most recent change and an increase in many of the fees, FHA loans are seemingly not, a borrowers best option for a mortgage, Schang says.

The purpose of FHA loans, historically, was to assist low-income buyers in purchasing a home. During the subprime boom from 2003 to 2007, not even 10 percent of the purchase loans being originated each year were backed by FHA.

In 2008, after the financial crisis, when mortgage standards became more restrictive, there was increase in borrowers and lenders to obtain and FHA loan because it was simply easier to get. According to the U.S. Department of Housing and Urban Development’s latest annual report to Congress, almost 40 percent of purchase loans by the end of 2009 were backed by the FHA. This number dropped to around 26 percent at the end of the last fiscal year.

Watching the demand for FHA’s grow, HUD tried to increase the FHA’s insurance fund through a series of increases in mortgage insurance premiums. This last increase was set forth in April.

FHA borrowers are charged a yearly mortgage insurance premium of up to 1.35 percent of the average outstanding balances of their loans. The fee is added in addition to each borrowers monthly mortgage payment. FHA also charges a 1.75 percent fee, upfront, when the borrower obtains the loan.

After paying a 3.5 percent down payment, a borrower getting a $200,000 loan, pays $225 per month in FHA Mortgage insurance, and in addition will pay an upfront fee of $3,500. If the borrower keeps that mortgage for 10 years before selling or refinancing, the mortgage insurance fees with total up to around $30,000.

$30,000 is exponentially more than what a borrower might pay for a private mortgage insurance on a conventional loan without an upfront fee. According to estimates from United Guaranty mortgage insurance company, conventional mortgage insurance premiums can be less than half of FHA’s insurance, depending on the borrower’s credit.

“A Conventional loan is generally less expensive for borrowers in almost all cases,” says Brian Goudld, Chief Operating Officer for United Guaranty.

Usually Chicago area home buyers opt for FHA loans simply because they do not have enough money saved up for the five percent minimum down payment that the majority of conventional loans demand. But even these homeowners should explore other options, such as down payment assistance programs, says Rob Chrane, president of Down Payment Resource.

Chrane says that there are various programs offered by states’ housing finance agencies and city our county agencies that buyers can easily overlook. Most borrowers tend to think that their income would be to high in order to qualify for these programs, however, many of them are in fact available to moderate income families as well, Chrane says.

“I can’t say everyone would qualify, but bu the same token, the income limits for these programs are not just strictly to low-income households, “ he says. “:They can range anywhere from 80 percent of the area median income up to 120 percent of median income.”

“And if you find a lender willing to offer conventional loans with less than 5 percent down, mortgage insurance won’t be an issue as some mortgage insurance companies are willing to insurance loans with as little as 3 percent down.”


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