If you’ve been following interest rates lately, you might have whiplash. Rates have gone up, then back down, then up again. And that’s all in the same day.  Over the last year mortgage rates have been more volatile than at any time in the nearly 17 years I’ve been following them. But in the last few weeks, since the credit crunch hit, the volatility has gone through the roof. Mortgage rates have tested their high point for the year, then swung around and dropped to the best rates we’ve seen in the last few months, before swinging back the other way and nearing the yearly highs again. What is going on with mortgage rates?

In normal times, mortgage rates go up and down based on activity in the mortgage backed securities market, and the prices move based on how traders read the state of the economy and the possibility of inflation in the future. Inflation brings down a bond’s yield, so any hint of inflation is going to decrease the value of a mortgage bond, meaning interest rates will go up. On the other hand, when the economy is slowing down this means that the yield is safe, so more investors buy in and mortgage rates go down. That is how it works in normal times. But these aren’t normal times.

All the economic reports point to a slowing economy, which should mean that rates go down. But that hasn’t been the case. Oil and commodity prices have dropped like a stone in the last two months. This should have made rates go down, but it didn’t. Unemployment is up, and so are foreclosures, while the stock market and home values are down. All of these should mean that rates are going down. Yesterday the consumer confidence index slipped to an all time low, and mortgage rates got worse. In fact, the normal concerns of inflation and economic slowdown don’t seem to have any correlation with mortgage rates now. So again, what is going on?

I think there are two explanations for what we are seeing, de-leveraging and panic. I’ve talked about de-leveraging before. This is like a margin call on the markets. Big investors, including mutual funds and hedge funds, have borrowed heavily to leverage the return on their investments. This strategy works great when the market is going up, a small amount of money controls a bigger investment and the returns are magnified. But what works well on the way up can be a killer on the way down. The losses are now magnified and in order to pay back the losses, investors are forced to sell everything they have – the good as well as the bad. The other explanation is panic. In a time of uncertainty everything is suspect and nothing does well. This needs to play itself out and confidence needs to return before the markets can stabilize.

But I do see two things which make me think that mortgage rates are still likely to go down.

1 – The risk for holders of mortgage bonds has gone down. Now that the Government has taken control of Fannie and Freddie mortgage bonds, are nearly as safe as treasuries. So as long as there is faith in the US economy (So far, so good. The dollar has gone up during this crisis) having the US government standing behind them, mortgage bonds should out perform other investments from a risk standpoint.

2 – The goal of the Fed and the Treasury is to get the economy growing again, and in order to do this the housing sector needs to get healthier. Treasury Secretary Paulson has said that one goal is to get mortgage rates down so that home owners have an incentive to buy. That hasn’t worked out so well yet, but over time it is likely.

The Fed is expected to cut the Fed Funds rate today by .50%. This will mean that rates for business loans and home equity loans drop, but it won’t necessarily help mortgage rates. Often mortgage bonds worsen after the Fed cuts rates. But usually within a week or so, the market sees a benefit and rates do drop. No one knows the timing, and in this crazy market there are no hard and fast explanations. But don’t be surprised if rates do start dropping again soon.

Illinois Mortgage Rates and News                    First time home buyer loans

Welcome to Illinois Mortgage Rates and News week in review for the week ending October 24th, my take on the week’s financial news and how it affected Illinois mortgage rates.

At the end of last week and the beginning of this week, it was starting to look like the markets were chilling and the real panic was over. Maybe not. The world wide panic has shifted from worries about the credit crunch to worries about the severity of the global recession. One trader defined this market as periods of panic interrupted by moments of calm. It is not just people or investors panicking, but the banks themselves. The banks are still afraid to lend money, and with all the markets in downdraft, investors are having to sell whatever they have, good, bad or ugly, in order to raise cash (except for treasury bonds, money is rushing into the safety of T bills). In a way this is like a margin call on the entire global economy. When you buy stocks on margin (with borrowed funds) and the stocks go up, a small investment can turn into a big return. We are seeing the opposite of that now. As prices of nearly every asset class drop, the banks, investors and other market participants need to come up with extra cash to meet their margin calls. With prices down they need to sell more in order to come up with the cash required, and this feeds into a downward spiral where lower prices feed more selling which means the prices drop even lower.

The remedy for this is two things, confidence, and liquidity. Governments, both here and abroad, are doing everything but dropping money from the sky, so liquidity is coming into the system. Confidence could take longer. The US is still looked at as the economic leader, in spite of all our problems, and having a lame duck president with almost no economic credibility is not helping to inspire confidence. The election just over a week away won’t solve the problems, but just knowing someone else will be at the helm may help to restore confidence that better times are coming down the road.

Some good news came out of the real estate market this week as existing home sales unexpectedly jumped by 5.5% last month. This was the biggest increase in 5 years. This is a sign that buyers are coming into the market as home prices drop. This is also a sign that the foreclosures that are now a big part of this market, are being absorbed. This does put pressure on the values of all homes, but it also means we are getting closer to equilibrium. Builders are not putting much new inventory on the market, and there are a lot of first time home buyers waiting in the wings, so we may be closer to a bottom than many people think.

All the economic reports continue to point to a recession and the big question now is how long and how deep it will be. Commodity prices are falling, oil is now down to around $65 per barrel, and gas prices are dropping like a stone. I don’t think this is going to make anyone want to rush out and buy a Hummer, but it will help ease the stress on budgets. Former Fed Chairman Alan Greenspan went before congress this week and basically said he’d screwed up. He said that he never saw this coming and he was sure that markets would regulate themselves better than the government ever could. All our financial turmoil now is a result of a flaw in the system he didn’t realize was there. We will be seeing a lot more regulation going forward.

Mortgage bonds started out the week with a huge rally. Rates improved through Wednesday when we were quoting some 30 year fixed rates at 5.875%. But volatility is still the rule, and despite a lot of good reasons why mortgage rates should be heading further down, bonds sold off heavily Thursday and Friday, breaking through support levels and ending the week at the worst point for the week. Mortgage rates are slightly better than where they ended last week, but much worse than where they were on Wednesday. This wide swing in mortgage bonds and mortgage rates has been the pattern over the last months. If you are in the market for a mortgage, the best thing you can do is understand how rates change, and be in a position to lock in when the opportunity presents itself. I expect that rates will drop again, but in this market there is no guaranty that they will stay down.

Here is what Illinois Home mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee. The conventional loans 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. 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’ll take the time to find the rate and program that is best for you.) :

Conventional loans up to $417,000

The Truth About

30 year fixed rate      6.125%      6.254% APR

15 year fixed rate      5.875%      6.026% APR

5-1 A.R.M.                 5.625%      5.783% APR

For Jumbo loans over $417,000

30 year fixed rate  * 6.50%     6.615% APR *

Special pricing requires 25% down payment or equity

7-1 A.R.M.                 6.25%    6.329% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate     6.00%    6.632% APR

With no origination fee – 60 day lock

30 year fixed rate     6.50%    6.759% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

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.

Expect the volatility to continue this week.

Illinois Home Mortgage Rates and News

One of the great things about blogging is that it sets up a conversation with my readers. I regularly get questions on what is happening in the mortgage market, both general mortgage and real estate questions, and things that are specific to their situations. But it seems that I do get a lot of questions that come up regularly. These questions relate to many situations, so this is the first in what will now be an occasional feature on frequently asked questions. I hope the answers will help you and your specific needs.

Do I have to pay all collection accounts in order to get a loan approved?

Maybe, but not always. This is up to the underwriter’s discretion. Part of it depends on how old the collection accounts are and how serious they are. You will automatically need to pay any debt that will be or could turn into a lien against the home. But small, and especially older collection accounts may not be an issue.   

We are really looking at a couple of separate issues here. The first is whether or not the collections will hurt your qualifying for a mortgage, and the second is whether you will have to pay the collection off at all. The best thing you can do is talk with a good loan officer early, before you are going to need the mortgage. If you have a lot of collection accounts this is probably bringing down your credit score, which will make it hard to qualify for a loan. If you pay off old collection accounts it will probably lower your credit scores at first. This is because you are taking old information with no activity and bringing them up to the present day (new information counts more than old info). Over time this will change and your credit scores will improve, but if you plan on applying for a mortgage soon, it may hurt more than it will help. If your credit is good enough to be approved, you are better off waiting for the underwriter’s decision. If you need to pay something off they will let you know. Be sure to allow plenty of time so that you can negotiate with the creditor and get everything paid at the best terms possible.

Here is more information on how you can fix mistakes and get your credit in the best shape.

Can you still buy a condo with no down payment?

In most cases no. Condos have been hit harder than other types of property by the changes in mortgage guidelines. It used to be no problem to buy a condo with no money down. But the default rate on condos was higher than that on single family homes, and lenders pulled back and even more importantly, mortgage insurance companies pulled back on what they are willing to accept. Conventional mortgage guidelines now require a 10% down payment.

There are still a few options. FHA allows a 3.5% down payment on a condo. The condo either has to be approved by FHA and show up on their list, or you can do an FHA spot approval. FHA is in the process of changing their condo guidelines and making it more standardized so more condo units are able to be approved. I will post information on that once it is official.

If you are a qualified veteran you may be able to buy a condo with no money down through a VA loan. This is a great loan and a great option, but the problem here is that like FHA, you can only use this for condos that are on their approved list. Unlike FHA, VA has no spot loan process, so if it isn’t on the list, it isn’t eligible for VA mortgage financing. In real life, here in the Chicago market, this means your options are limited. Most of the condos available under the VA approved list are older properties. During the last several years when the market was booming and new condos were being built and rentals were being converted into condos, there were many conventional options, so the developers didn’t need to go through the extra cost and paperwork of getting their buildings VA or FHA approved. So this can be a great way to buy with nothing down, but your options will be slimmer.

What banks offer FHA mortgages in Chicago?

FHA loans are generally available through mortgage brokers and mortgage bankers, not regular banks. Maybe the more important question is, how experienced is the loan officer and their mortgage company in dealing with FHA loans? FHA used to be the best loan option for first time home buyers and other home buyers with a low down payment. But over the years FHA got a reputation as being hard to work with, and conventional options came out for buyers with first low down payments, then no down payments. As mortgage underwriting guidelines loosened, FHA Mortgages became less and less of a factor in the market. That has changed completely over the last year as conventional guidelines swung around 180 degrees and are now much more restrictive, while FHA has increased their max loan amount to $410,000 and have better pricing for many buyers with good but not perfect credit. This shift means that FHA mortgages are the hottest thing out there for new home purchasers.

The problem here is that so many of the loan officers and mortgage companies are now dealing with FHA for the first time. FHA is a great program, but it has its quirks. Conventional loans have gotten more and more automated over the years, and up until recently the documentation has been lighter. FHA requires not only more documentation and more forms but also a different mind set from how conventional loans are put together. I have a friend who is an FHA underwriter for a large wholesale company processing mortgage broker submitted loans, and she is amazed at how many loans are sent in that don’t even come close to FHA guidelines.

If you are about to buy a home and you are thinking of using an FHA loan, do your self a favor and do some extra checking on both your loan officer and the mortgage company. How long have they been in business? How long have they been doing FHA loans? Are they familiar with FHA guidelines? How many FHA loans have they actually closed?

FHA can be a great program, and is usually the best option for first time home buyers, but it takes more experience to get it right. If you want to close on time and at the best terms, make sure you work with an expert, not someone who is learning at your expense.

I’ll answer more questions in later posts.

Illinois Mortgage Rates and News                 First time home buyer loans

Welcome to Illinois Mortgage Rates and News week in review for the week ending October 17th, my take on the week’s financial news and how it affected Illinois mortgage rates.

I think we are starting to return to normal – if normal is a period where the markets -all the markets – swing wildly from high to low and back again, and then reverse themselves the next day. All this year volatility has been at an all time high, but since Lehman Brothers fell and the global credit system went into cardiac arrest, the volatility has gone into overdrive. But as crazy as the markets have been, the panic is receding and the credit market is taking baby steps back to a functioning level. There are still huge problems in the global debt and equity markets, but the governments, here in the US and all across Europe, have stepped in and injected oodles of cash into the system and there are signs of improvement.

At the beginning of the week the Secretary Paulson and Treasury Department reversed course and changed their plan from the original idea of buying up the toxic mortgages and bad assets of the banks, to buying a direct ownership in the banks. This idea was originally off the table for philosophical reasons, but market response has a way of changing minds. The government met with the nine largest banks and injected cash in exchange for an ownership position. More money will be put into smaller institutions over the coming weeks. This was an unprecedented move, but it looks like it is starting to have an effect. The credit markets are still stressed, but there are signs that they are starting to function again. The Ted spread (3month Libor – 3 month treasuries), a ratio of credit stress, is starting to fall, though it is still historically high. Confidence is still shaky, but returning, and with the government poised to add liquidity as needed, we should see more improvement in the coming weeks.

The reports this week all point to a still slowing economy. Consumer confidence dove off the cliff this month, coming in at 57.5, a drop from 70.3 in September and the biggest drop since they started the index back in 1978. Home starts are way down for the year and at the lowest level since 1981. In the long run this will be good news. The biggest problem in the real estate market is excess inventory, and with little new construction coming on the market, the supply and demand will equalize sooner. Industrial production declined again and retail sales slid by 1.2%, double the forecast. The CPI and PPI Inflation numbers came in flat, and with oil and commodity prices plummeting the outlook for inflation is one of the few bright signs.

Warren Buffet is now in the market buying American stocks. His motto is, Be fearful when others are greedy, and be greedy when others are fearful. He could be moving in too early, but with all the gloom in the air the chances are good that we have seen the worst of the decline in the stock markets. Buffet’s record speaks for itself. I think we could be in the same situation in the Chicago area real estate market. I don’t know that we are at the bottom, but I do know that there are some real bargains out there. I wrote about this earlier this week – Is this the right time to buy?

A lot of the volatility in the stock and bond markets is due to de-leveraging. This week investors and hedge funds who had borrowed heavily were selling everything, the good, the bad and the ugly, to raise cash and pay down debt. We saw that on the mortgage bond market as bonds plunged through resistance at the beginning of the week and hit the highest rates of the year. This in spite of all the signs that should be pointing to lower rates. By the end of the week bonds were coming back strong. Rates were up in the high 6s in the middle of the week, before bouncing off the bottom and ending the week at their best point. I think we will see lower rates this week. My advice to new mortgage applicants is to not lock into the rate now. As part of my job I monitor the markets closely and can help you time the market and let you know when the odds are best for locking your rate. The volatility is amazing, but having patience in a market like this can save you a lot of money.

Here is what Illinois Home mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee. The conventional loans 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. 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’ll take the time to find the rate and program that is best for you.) :

Conventional loans up to $417,000                                                                        Photo courtesy of The Truth About

The Truth About

30 year fixed rate      6.255%      6.374% APR

15 year fixed rate      6.00%      6.137% APR

5-1 A.R.M.                 5.50%     5.649% APR (1 year pre-payment penalty)

For Jumbo loans over $417,000

30 year fixed rate  * 6.50%     6.615% APR *

Special pricing requires 25% down payment or equity

7-1 A.R.M.                 6.125%    6.286% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate     6.125%    6.742% APR

With no origination fee – 60 day lock

30 year fixed rate     6.375%    6.754% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

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.

Expect the volatility to continue this week.

Illinois Home Mortgage Rates and News

It is always a leap of faith to do something for the first time, and first time home buyers who are in the market to buy a home now need to take a bigger leap than normal. These are scary times in the real estate market. Home prices are down sharply from where they were last year, or even over the last several years. The credit crunch has morphed into a financial crisis and it looks like we are in a recession, and the recession may get worse before it gets better. Financing is tighter than it was before and you will need to have a down payment in order to get a mortgage. Being a first time home buyer is always scary but with fear in the air the safe thing to do is to sit on the sidelines. Or is it?

There is no way to know when you reach the bottom of a market, and if you buy your first home now you may be buying early. (But buying real estate should never be looked at as a short term decision. If you are buying a home you need to plan on being there for a minimum of 5 years.) But a few years back when everyone said real estate was the thing to get into, this was the same time when prices were the highest. When home prices were at their peak they looked like they would continue to go up. Now when home prices are much lower, most people are convinced that they will continue to go down. In the stock market, one school of thought is called contrarian investing – the idea that crowds are usually wrong, too optimistic when things are good and too pessimistic when the market is bad. The idea here is that the best time to buy is when the mood is bleakest and conventional wisdom says it is the worst time to buy. I’ve talked before about how greed and fear move the markets. It works the same in the real estate markets.

Here are some reasons this could be the right time for a first time home buyer to buy their home now or over the coming months:

1. With the credit crisis reaching a head, boatloads of money have been pumped into the economy. It was necessary to pump this money in to restore confidence, but we won’t see the results of this pump priming for months. There is always a lag in the system, but this added liquidity will be felt, probably starting next spring.
2. The banks will start lending again now that the government is investing in the biggest banks and guaranteeing so many loans. This takes some of the risk away and makes it easy for lenders to lend. This won’t mean we are going back to the easy credit period we were in, but we won’t be strangled by lack of credit.
3. The real estate market has been going down over the last few years, before most people really realized it, and prices are already down a by lot. Looking backwards, the risky time to buy was when the market was the hottest.
4. Real estate is negotiable. The properties that are selling now break down into 2 main categories, sellers who are motivated to sell, and bank owned properties or short sales.
5. Mortgage money is available, there are first time home buyer programs where you can buy with a low down payment, and mortgage interest rates are low. When the economy and the home market pick up, rates may be much higher, so your monthly payment would be higher, too.

I’m not saying that the economy is going to improve right away, it is likely to get worse. I don’t see home prices jumping higher any time soon, either. There are too many homes on the market now, and inventory is likely to grow as the economy worsens. At the same time there is a huge pent up demand of first time home buyers who want or need to buy a home, but have been sitting on the sidelines waiting for the right time to get in. At some point the buyers will jump in, and we will shift from a strong buyer’s market back to a sellers market.

First time home buyers may have a great opportunity now and in the coming months. You need to look at your situation and see what is right for you, both now and over the long term. As scary as it looks now, buying in a down market may be the best thing you can do.

If you are a first time home buyer or want to know exactly it takes to buy a home and get a mortgage in today’s market, click here for a Free, Home Buyer’s Guide.

Naperville homes

Illinois Mortgage Rates and News

Welcome to Illinois Mortgage Rates and News week in review for the week ending October 11th, my take on the week’s financial news and how it affected Illinois mortgage rates.

The view on the economy this week changed from fear and concern to outright panic. The markets, both here and globally were in free fall this week. Stocks, bonds, you name it, this week was a bloodbath. When the $700 trillion dollar economic bailout bill failed to gain the markets confidence and get the credit markets moving, Treasury secretary Paulson and Fed Chairman Bernanke pulled out some more tricks from their bag and did everything but drop money from the sky. The Fed doubled their auction capacity from $450 billion to $900 billion, opened their lending window to commercial paper and dropped the discount rate by .5% in conjunction with a consortium of global national banks. And none of it made a bit of difference. The commercial paper market, banks lending to other banks, remained frozen, and stock markets around the world went back in time about 5 years to the values they were at in 2003. The stock markets now about 40% off its peak, the Dow was at about 14,000 a year ago and closed just above 8,451 today (after being below 8,000 in the morning).

This is all panic now. The credit crunch has been moving in slow motion over the last months, but now it has shifted into overdrive and its momentum is faster than the government can respond. This is all about confidence, banks having confidence that the banks they lend money to will be able to repay it, and investors having confidence in the banks and the markets. It doesn’t help that this is happening right before a presidential election. President Bush is the lamest of lame ducks and is no help in showing leadership and confidence in our system. Treasury Secretary Paulson has gone from near invisibility to being our defacto economic president. There are at least two more tricks up his sleeve, though, and as prices dive lower the panic may be running out of steam.

The bailout bill, for all its hype didn’t work. Most economists said it was poorly conceived, but it was better to pass something than to take too much time getting the right package. The panic happened anyways, and now Paulson is rolling out Bailout version 2.0. This version, the details sketched out in a late Friday announcement, would allow the government to use the money from the bailout package to buy shares in the troubled banks, recapitalizing them and giving the market confidence (having the treasury as a partner should be a confidence builder, but which banks will be rescued and which allowed to fail will be part of the drama going forward). This is the same basic plan that Britain announced earlier this week, and a similar plan worked well for Sweden when they had a similar crisis back in the 90s. The G7 group of industrial nations is meeting in Washington over the weekend, and there is still hope of more concerted action to attack the crisis (so far they are having trouble even agreeing on a common statement).

So far helicopter money isn’t helping. Yet. At some point greed will replace fear, the panic will end and we’ll see improvement. But getting the credit market functioning again and the markets out of the nose dive is just the first step. We are in a recession and the housing market is still the root of the problem. But there are some good signs, too. Oil prices settled under $80, the lowest in over a year. Food and other commodities are falling too. The price increases we’ve been getting used to should be over for a while and consumer prices should drop noticeably over the coming months.

Mortgage rates jumped this week as mortgage bonds got slaughtered. The week started with money flowing out of stocks and into treasury bonds and mortgage bonds. But as the week went on, and especially after the Fed announced their surprise rate cut, mortgage bonds fell through support levels to their worst level in over a month. In a normal market when the stock market goes down there is a flight to quality and money rushes out of stocks and into bonds, including mortgage bonds. This isn’t a normal market. Investors don’t know who to trust, and even though the government stands behind Freddie and Fannie and is the stabilizing force in mortgage bonds, in a hyper-volatile market investors dumped mortgage bonds. Mortgage rates jumped about 3/8 of a point for the week.

On the real estate front, despite all the turmoil, people are still buying homes. The buyers I’m seeing are mostly first time home buyers, and it seems short sales (where the seller sells below the current mortgage value, subject to the mortgage holder’s approval) are the hottest thing right now. Mortgage money is available, and there are plenty of bargains out there if you are in a position to buy. This is a tough market if you have a home to sell, but if you are a first time home buyer, are transferring into the Chicago area or if you are ready to buy and don’t have a home to sell, you are in a position to get a great home at prices that would have seemed ridiculously low just a year ago. There are still a lot of homes for sale on the market, and the market won’t bottom out until this inventory is reduced. But there is also pent up demand from buyers who have been on the sidelines waiting for the right time to jump in. It takes nerve to buy during nervous times, but the best time to buy is when fear is in the air. Home values now could look like bargains a year or two from now.

Here is what Illinois Home mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee. The conventional loans 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. 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’ll take the time to find the rate and program that is best for you.) :

Conventional loans up to $417,000

30 year fixed rate 6.375%      6.564% APR

15 year fixed rate 6.00%      6.137% APR

5-1 A.R.M.            6.00%     6.213% APR

For Jumbo loans over $417,000

30 year fixed rate * 6.50%     6.615% APR

Special pricing requires 25% down payment or equity

7-1 A.R.M.             6.375%    6.486% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate 6.25%    6.834% APR

With no origination fee – 60 day lock

30 year fixed rate 6.50%    6.867% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

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.

With the markets closed for Columbus Day on Monday, there is an extra day for the markets to calm down and possibly for more globally coordinated action to calm the market. Still, expect the volatility to continue this week.

Illinois Home Mortgage Rates and News

Cook County tax bills were sent out last week, and for a lot of homeowners the bills were a big surprise – and not in a good way. My phone has been ringing with home owners wondering how their taxes moved up so sharply. Home values have trended down over the last few years, but accessed values have moved up, in some cases by a lot. The problem is that properties are re-accessed every 3 years (each township rotates so they are not all done at the same time), and this year the re-assessment comes at a time when legislation has phased out some tax caps, so the result is a spike in tax bills while the value of their home is lower.

The real estate tax system is complicated and there are a number of factors that go into calculating the tax bill. The first thing to do is to check your bill and make sure you are getting all the correct exemptions. If you aren’t getting your homeowners exemption this could make a big difference. But one of the major factors is the property’s accessed value. If you can show that the accessed value is higher than the home’s real value, you may be able to get your tax bill lowered. There are attorneys and specialists who do this regularly and charge you a percentage of the taxes you saved. Or you can do this yourself.

If the property was purchased within the last 3 years, the assessor will base the new accessed value on the sale price. This might not help you if you bought when the market was still moving up, and now it is down from what you paid. If you’ve owned the home longer, your accessed value will be based on what comparable homes have sold for recently.

Here is the link to what you need to do to appeal your property taxes in Cook County.

Here is the online Cook county residential property tax appeal form.

Tax appeals are handled the same way in all of Chicago’s collar counties.

Dupage County property tax appeal process.

Dupage County tax appeal forms.

Kane County property tax appeal process.

Will County property tax appeal process.

Will County tax appeal forms.

Kendall County Assessors Office

Lake County property tax appeal process.

McHenry County property tax appeal process.

Illinois Mortgage Rates and News

As the news lately has been filled with doom and gloom about our economy, I’ve noticed a funny thing. First time home buyers are coming out of the woodwork. I’m getting more calls, emails and contracts from buyers who want to buy their first home than any time in the last six months. As home owners worry about how there homes are worth less, new buyers are looking at this as an opportunity to buy a home at fire sale prices. Buying now they can afford homes that were out of their price range just a year or two earlier.

There is no doubt that fear is in the air. But in some ways that makes this the best time to buy, especially if you don’t have a home you need to sell first. The truth is that no one knows when the best time is to buy. The market could go lower, but it is soft now and prices are down, substantially in some cases. If you are a first time home buyer here in the Chicago area, here are some reasons why you might consider buying now:

• Credit for other loans is tightening but not so with mortgages. The Government now owns the bank (FHA, Fannie Mae and Freddie Mac), so mortgage money is available.
• There are still great programs for first time home buyers with low down payments – FHA allows a minimum 3.5% down payment, and the new Mortgage Access program is available to qualified buyers with 0 money down.
• There is now a tax credit of up to $7,500 for new buyers, which you can take against your income (you will pay it back without interest over the next 15 years).
• Interest rates are still low. Mortgage rates have been bumping up and down a lot lately, but are lower than they were just a month ago. Lower mortgage rates make homes more affordable.
• With more homes on the market there is more of a selection for buyers to choose from. When the market was booming a few years back, home buyers were jumping on the first listing that was close to what they were looking for. Now they can pick and choose to find the home that is best for them.

When you take in the other reasons for owning your own home (tax savings, equity build up, pride of ownership and so on), this could be a great time to buy your first home. It takes nerve to make a move when times are scary, but scary times often offer the best opportunities.

Illinois Mortgage rates and News

This is a guest post to show what’s happening with mortgages on the other side of the Atlantic, from  Think Money (UK).

Think Money reports that the uncertainty surrounding the housing and mortgage markets has meant that fewer homeowners are relying on equity tied up in the value of their homes as a source of funds, recent figures have shown. 
The figures from the Bank of England showed that households had collectively paid £2.8bn ($4.5bn) into their homes in the April-to-June quarter, the first ‘negative withdrawal’ reading since 1998. In comparison, people took £5.2bn ($9bn) from their homes in the first quarter of 2008, and about £10bn ($17 bn) between April and June 2007, according to the BBC.

The rapid rise in house prices in the decade leading up to 2007 had made it easy for homeowners to withdraw from their increased equity. But the recent falls have meant that this is no longer a viable option for many mortgage holders. Speaking to the BBC, Howard Archer at Global Insight said: “Higher mortgage rates, markedly tighter credit conditions and falling house prices have increasingly reduced the attractiveness of, and scope for, housing equity withdrawal. 
“This reinforces our belief that we are in for an extended period of serious consumer retrenchment.” 
Think Money provides Mortgage Advice in the UK.

Welcome to Illinois Mortgage Rates and News week in review for the week ending October 4th, my take on the week’s financial news and how it affected Illinois mortgage rates.

The financial news this week all revolved around the fate of the financial bailout bill. The markets were thrown for a loop on Monday when the bill was rejected by the House of Representatives. The vote was expected to be close, but both parties claimed they had the votes locked in over the weekend. The stock market reacted by diving nearly 800 points after the deal fell through. The rest of the week the markets nervously treaded water waiting for some kind of plan to come together. The bill went from the 3 page Paulson proposal to a 110 page House bill, to a 400 plus page, pork sandwich which the Senate passed. The House followed through on Friday and passed the Senate bill, saving face by claiming the new bill was an improvement over what they had to work with before. The markets, which were trading back and forth in a tight range throughout the week, didn’t greet the news as expected. The stock market went from a huge gain back to flat after the announcement, and mortgage bonds improved slightly after being down most of the day, but again mostly flat.

The anticipation was that there was a lot of money sitting on the sidelines, just waiting for the signal to move in. If you are a baseball fan, what’s happening in the financial markets is all too similar to what is happening with the Chicago Cubs playoff hopes. Great anticipation for moving forward, and then nothing. I’m still hoping that the Cubs will pull out a couple of road victories and bring it back to Chicago where they will win a dramatic fifth game at Wrigley Field. But I’m not feeling as confident as I was going into this. The same may be happening with the bailout plan. Investors may be taking a wait and see attitude before committing to any action.

The $700 billion dollars is not enough to fix the economy on its own. The idea behind the plan is that we are having a crisis in the credit markets because the of the toxic mortgages in the system and the fact that no one knows exactly who has what and how much risk is involved. The bailout plan won’t get rid of all the toxic mortgages and it won’t be enough to recapitalize the big banks and financial companies. This is the financial equivalent of the placebo affect. In blind studies new medicines are always compared against placebos, sugar pills, and the medicine is effective if it performs better than the placebo. If people believe they are taking a medicine that will help cure their condition, their bodies respond positively, even if they aren’t getting real medicine. If global investors have faith that this plan will help, and it eases the fear and allows companies to loosen their wallets and start lending again it will be a success. We will see how it works out over the next few weeks.

The economic news released this week all pointed to a slowing economy. New auto sales came in 26% below last year. The ISM manufacturing index came in at 43.5, which is more proof we are in a recession. The Friday release of unemployment numbers showed a loss of 159,000 jobs in September the 9^th straight month of losing jobs.

In spite of all the news about the credit crunch, there is still plenty of mortgage money available. I got several calls over the week from people wondering if mortgages were being cut off, and the answer is no, if anything mortgage money is more available than it was a few weeks ago. Most of the loans we are doing now are either conventional or FHA loans. The conventional loans are loans that are able to be sold to Fannie Mae and Freddie Mac, which were both taken over by the federal government a few weeks back. FHA is a government program. When the government is the bank or stands behind the bank, it means that mortgage money will continue to be available, and the government is going to do everything they can to get the housing market stabilized and moving again.

Here is what Illinois Home mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee. The conventional loans 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. 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’ll take the time to find the rate and program that is best for you.) :

Conventional loans up to $417,000

30 year fixed rate 6.00%      6.136% APR

15 year fixed rate 5.75%      5.819% APR

5-1 A.R.M.            5.875%     6.176% APR

For Jumbo loans over $417,000

30 year fixed rate *6.50%     6.615% APR Special pricing requires 25% down payment or equity

7-1 A.R.M.             6.125%    6.344% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate 5.875%    6.524% APR

With no origination fee – 60 day lock

30 year fixed rate 6.00%    6.486% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

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.

There is sure to be more activity in the credit markets over the week, and I expect volatility to ramp up.

Illinois Home Mortgage Rates and News