September 2008

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending September 26th, my take on the week’s financial news and how it affected Illinois mortgage rates. This week the markets were in limbo as everyone waited for congress to approve some version of the financial bailout bill. The original Paulson proposal has been changed around so there is now more transparency and accountability. At several times over the week it looked like an agreement was about to come together, but politics came in the way as neither party wanted to take the blame for what is sure to be an unpopular program. Even as groups of economists said that this isn’t the right way to handle the crisis, the risk of not doing something quickly was judged as a bigger risk. The markets were fairly calm, but the expectation is that an agreement will be in…

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Do You Lock in Your Mortgage Rate, or Do You Float when the Markets are Nervous?

Have you ever watched the TV game show The Price is Right? The most compelling part of that show is when the contestant has already won something, but they are now faced with a decision. Do they want to keep what they have, or trade it in for the unknown? What lies behind door number two? Is it a fabulous prize like a new car or a trip around the world? Or is it a goat and a wheel barrow? I think it is human nature to always want more, and when I watch the show I find myself rooting for the contestant to take the chance and go for the glory. But if they get the boobie prize, it is easy to feel kind of smug. They should have been happy with what they already had. When you buy a home or decide to refinance your mortgage, you are…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending September 19th, my take on the week’s financial news and how it affected Illinois mortgage rates. I expected this to be a wild and volatile week. I never expected it to be this wild. There was a near melt down in the financial markets and at the end of the week in an unprecedented move, the government was putting together a bailout of the entire banking system. Ever since the credit crunch kicked in over a year ago, the economy has been crippled by a lack of credit. All this goes back to the banks and brokerage company’s exposure to bad mortgage loans. While the real estate market was hot, they loaded up on loans that seemed risky at the time, and down right stupid in hindsight. It was a herd mentality that said risk didn’t…

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Scary Times in the Financial Markets Could Lead to Opportunities

  These last few weeks have been scary times in the financial markets. It felt like an earthquake a little over a week ago when the government stepped in and took over mortgage giants Fannie Mae and Freddie Mac. The ground shifted on Wall Street again this weekend as the feds declined to save Lehman Brothers, letting one of the biggest players on Wall Street go bankrupt as a result of its exposure to bad mortgage loans. Bank of America also bought out Merrill Lynch this weekend for pennies on the dollar, avoiding another big name bankruptcy. The earth moved again Tuesday night when the US government stepped in to save AIG, a huge international insurance company that was overloaded with credit swaps linked to mortgage debt. The AIG deal is structured as a 2 year loan of 85 billion dollars in exchange for 80% of the company’s equity. AIG…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending September 12th, my take on the week’s financial news and how it affected Illinois mortgage rates. It’s beginning to seem like all the most important news happens on the weekends. At least that’s the case in the financial markets lately. Last week the big bombshell was the government takeover of mortgage giants Fannie Mae and Freddie Mac. This takeover was something that had long been expected, but it wasn’t looked at as an imminent event. After all, just a month before, the Fed and the Treasury made a joint statement that they were fully prepared to stand behind Fannie and Freddie. There has always been an implicit guarantee that the government would step in if necessary to keep the mortgage market functioning, but the guarantee made it official. Only this wasn’t enough to restore confidence to…

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It’s alive??? Chicago, IL FHA Down Payment Assistance Programs May be on Their Way Back

Not so long ago it looked like the FHA Down Payment Assistance programs (DPAs) were gone for good. The DPAs were one of the last ways available for first time home buyers Loan and others who were short a down payment but otherwise qualified, to buy a home with no money out of their own pocket. This program was a way to launder a seller’s equity and use it as the basis of a grant from a charitable group like Ameridream or Nehemiah (here is a detailed look at how FHA DPAs work). But the DPAs were cut as one of the provisions of the new housing bill due to go into affect October 1st. It now seems that rumors of their death may be greatly exaggerated. A compromise deal to save the DPAs appears to be about to be accepted, and the FHA Down Payment Assistance programs could be…

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Did You Miss The Boat on Your Mortgage Refinance?

When mortgage chicago il rates started moving up at the beginning of this summer, many people thought they missed the boat on any chances of refinancing their mortgage and getting a better interest rate and payment. Well, the boat is on the way back to port and it looks like you are about to get another chance. With the weekend takeover of Fannie Mae and Freddie Mac, the government is now standing fully behind these mortgage giants. This move was a green light for investors to buy more mortgage bonds, as the risk on mortgage bonds is now roughly the equivalent of buying Treasury securities. The mortgage bond market had a huge day yesterday, and mortgage interest rates have dropped. Why would you consider refinancing ? You can lower your interest rate and payments. You can shorten your loan term and pay your mortgage off early. You can take cash…

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Fannie Mae and Freddie Mac Bailout – How Will This Affect Mortgage Rates?

As expected, the US government stepped in today and placed Fannie Mae and Freddie Mac into a conservatorship under federal control. This is the long talked about bailout of the two mortgage giants. This action has been anticipated for a while as both the Fed and Treasury Secretary Paulson announced a month ago that they were ready to stand behind and guarantee any losses. Announcing the guarantees calmed the markets at first, but further losses have now forced the Government’s hand. The new plan means that the Federal Government is not just standing behind Fannie and Freddie, but propping them up completely. They now have virtually unlimited access to capital. This plan will dilute common shares of stock in the companies to the point they are near worthless. Preferred shares (owned mostly by big banks) will still be viable, but a new treasury class of preferred stock (owned by the…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending September 5th, my take on the week’s financial news and how it affected Illinois mortgage rates. It’s official. The biggest threat of inflation has passed and the weakening economy is our worst fear going forward (for this week anyways). Mortgage bonds are in full rally mode now, which means Chicago mortgage rates are moving down. Rates are at the best level in months, and this rally may have some more room to go. Over the last 3 months all the talk from the financial pundits (and many Fed Chairmen) has been about how inflation is set to ravage our economy. But now oil prices are down to $105 per barrel (from a high of $147 in July), and the economies in Europe and Asia are skidding to a halt. The dollar is showing signs of life…

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FHA Credit Letters – How Explaining What Happened Can Help You to Get Your Chicago, IL Mortgage Approved

Chicago, Illinois – One of the major differences between FHA loans and conventional loans is how the loans are approved. Conventional loans are almost entirely dependent on the automated approval, that is as long as you put the right information into the computer (Getting the information right is one of the jobs of a good mortgage broker or mortgage banker) and provide the matching documentation, the automated decision will stand. FHA is different. With FHA there are two ways to get your loan approved, through the automated decision, or with an FHA manual underwrite. FHA is also different in that any credit issues that show on your credit report (especially over the last 2 years) will need to be explained. If you already have an automated approval, this is more of a matter of dotting the I’s and crossing the T’s. If you can’t get your FHA loan approved automatically,…

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