June 2008

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending June 27th, my take on the week’s financial news and how it affected Illinois mortgage rates. The Fed took the spotlight this week, and as anticipated, they left interest rates the same but talked tough about the threat of inflation. Wall Street wasn’t happy with the decision. The Dow hit a low just ticks away from a 20% overall decline, the official mark of a Bear market. Not only did the Fed not raise rates, but their announcement balanced the threat of inflation with the threat of further slow downs in the general economy. This signaled that the Fed plans to stand pat, keeping rates the same until something forces their hand. The stock market dived and mortgage bonds benefited. Mortgage backed securities moved through an area of strong resistance Friday afternoon, ending the week at…

Read More

FHA Takes on Risk Based Pricing

Over the last months conventional mortgage guidelines have tightened, and with risk based pricing mortgage financing has gotten more expensive for most borrowers. Conventional mortgage insurance has pulled back on what they will cover, and the cost of mortgage insurance has gone up (more increases are coming in August). This combination has made it harder to qualify for a conventional loan, and more expensive for those who have lower down payments and good but not great credit scores. The one bright spot in the real estate financing market has been FHA. Earlier this year FHA raised their maximum loan limit (up to $410,000 for a single family home here in the Chicago area, lower in other parts of Illinois) making FHA a great option for many borrowers who would have once been conventional borrowers. But FHA is feeling the pinch of the market, too. Effective July 14th FHA is changing…

Read More

How to Get the Best Rate – Shopping for your Illinois Mortgage – Part 4

In the first installment of this series we looked at some of the things to look out for when shopping for your mortgage . In the second part we talked about hidden fees and pre-payment penalties.  The third installment covered APRs and how important it is to know how to read a Good Faith Estimate of closing costs.. In this, our last installment, I’ll go over what may be the most important factor in choosing where you will get your mortgage, reputation and integrity. So many people focus on getting the lowest mortgage rate, but the lowest quoted mortgage rate isn’t always the best deal. I’ve heard too many horror stories over the years of buyers who were promised one rate, but when they got to closing they found the rate was higher, the costs were considerably more, or the program was different than what they were promised. If you…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending June 20th, my take on the week’s financial news and how it affected Illinois mortgage rates. Is it over yet? Not so long ago the big worry was that our economy was on the brink. Bad mortgages and the lack of credit were choking the system. Big banks and financial powerhouses were on the edge of failure and our whole economy was in the danger zone. The Fed moved decisively to inject credit into the financial markets and stem the panic. Wall Street breathed a sigh of relief, but the easier credit didn’t trickle down to the small business or home mortgage markets. On Main Street the stranglehold still seems pretty tight. The economy hasn’t been growing, but with the rate cuts and stimulus checks there have been some signs of activity. And now with gas…

Read More

How to Get the Best Rate – Shopping for Your Illinois Mortgage loan – Part 3

In the first installment of this series we looked at some of the things to look out for when shopping for your mortgage . In the second part we talked about hidden fees and pre-payment penalties.  In this installment I’ll talk about some of the ways to compare mortgage offers and what you can do to protect yourself when shopping for a loan. Knowing what to look for, and what questions to ask, puts you in a position where you can make an informed decision. APR – The APR, or Annual Percentage Rate, is a measure used to compare different loan options. The rate on the APR is always higher than the note rate, the actual rate you will pay for your loan. As part of the Truth in lending Act, the government requires that any time a rate is advertised, the APR also has to be shown. This is…

Read More

How to Get the Best Rate – Shopping for Your Illinois Mortgage Loan – Part 2

In the first installment of this series we looked at some of the things to look out for when shopping for your mortgage. Here are some more things to be aware of: Hidden Fees – As I said before, most lenders are borrowing money from the same sources and their cost of business is similar. So if one company’s rates are unnaturally low, it mans they are making up the money in other ways. There is a relationship between the rate that is quoted, and the amount of fees that are charged. The lower the rate is, the more money you will have to pay to get it. It costs a certain amount of money to process and fund a mortgage. Mortgage companies are in business to make a profit, so they know that they need to bring in enough income to pay all their expenses and earn a reasonable…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending June 13th, my take on the week’s financial news and how it affected Illinois mortgage rates. Over the last few weeks there has been a true change of direction in the mortgage bond markets. Mortgage rates have gone up and down as the bond market battled over what was happening with the economy. Are we in a severe recession where jobs and spending are our biggest concern? When this is the biggest fear mortgage rates go down. Is inflation heating up and will it take hold and destroy confidence along with our purchasing power? This fear leads to higher mortgage rates. Up until now there have been arguments on both sides. The economy is a mess, and which mess was worse seemed more academic than practical. Whichever factor was worse the Fed was still on their…

Read More

How to Get the Best Rate – Shopping for Your Illinois Mortgage Loan – Part 1

Chicago, IL. – Are you in the market for a mortgage? If so you are ready to compare rates and prices to make sure you are getting the deal that is right for you. Mortgage ads are everywhere. My spam folder fills up with mortgage offers I never requested, and I cringe when I hear the mortgage ads on the radio. The approach irritates me on these ads because they distort the facts and play on people’s fears. The focus of most of these ads is that they (and only they) can get you the lowest rate for your mortgage. Many people think of loans as a commodity, and that one lender is the same as another, so the decision should be made strictly based on who has the best rate. This can be a big mistake. It is true that most lenders have the same loan programs, but there…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending June 6th, my take on the week’s financial news and how it affected Illinois mortgage rates. The Dow tumbles 400 points. Oil surges to a new record high of $139 per barrel. The unemployment rate spikes by .5% to 5.5%. The US dollar tumbles on world markets. Mortgage defaults reported at the highest level since 1979. Sounds like a bad week. Make that a bad day. A really bad day. Over the last months, the economy has been dealing with the twin dangers of recession and inflation. In the last few weeks it looked like the economy was growing slowly enough that we might avoid the recession, but it’s looking more and more likely that we may be lucky enough to get both at the same time. The markets, both stock and bond, have been in…

Read More

Chicago FHA loans, IL Area – FHA is the New Conventional

Last year, when the Sub Prime market was imploding, there was a lot of talk about how FHA, a Government backed loan, was going to be the new Sub Prime. It hasn’t worked out quite that way. In fact, the real truth is that FHA is the new conventional mortgage. Sub Prime mortgages were loans for borrowers who couldn’t qualify for the more stringent conventional guidelines. This often meant borrowers who had credit problems, or it could mean borrowers who couldn’t prove their income. The thing about Sub Prime loans is they were profitable for the lenders (if they got rid of them quickly). These loans were often structured as 2 or 3 year adjustable rate mortgages, and they were priced several points higher than a conventional fixed rate would be. When the market was hot, defaults were low, so these loans were money machines for the lenders who offered…

Read More