Welcome to Illinois Mortgage Rates and News week in review for the week ending November 28th, my take on the week’s financial news and how it affected Illinois mortgage rates.

I hope you all had a great Thanksgiving and have given some thought to what you are thankful for. In the mortgage market this week we have one more reason to be Thankful. Mortgage rates dropped this week, by a lot. Over the last month mortgage rates have been flat, and in a holding pattern. The news over the last few months has been consistently grim. The economy is slowing dramatically and the threat of inflation is just a hazy memory from this past Summer. Deflation is the watchword now. The Fed has taken short term rates all the way down to 1% in an effort to get banks to lend money. The government has been trying to get mortgage rates lower in order to jump start the economy, and all of these factors should have made a difference in brining mortgage rates down. But up until now, no luck.

It was a new Fed program announced on Tuesday that did the trick. With this new program the Fed will directly buy up to $600 billion in Fannie Mae and Freddie Mac and other mortgage backed securities, as well as another $200 billion in other consumer credit obligations. This is huge news, and something the Fed hasn’t done in the last 50 years. By moving into the market the Fed is sending a clear signal that they are going to stay in the market and do whatever is needed to keep rates down and get the market moving again. The markets reacted with a buying frenzy, and mortgage rates are about a half point lower now than they were at the end of last week.

If you are about to buy a home, this is great news. If you are thinking about refinancing your home, this could be great news, but it is not going to help everyone. Refinancing your mortgage is a great way to lower your payment and it can help those who need to restructure their debt and those who want to move from an ARM into a fixed rate loan. But many of the people who would get the most benefit from refinancing are those who bought in the last several years, when home prices were at their highest and mortgage underwriting was easier. One issue we are facing now is low appraisal values. Home prices have moved sharply lower, and the value may not be enough to support the mortgage. If you bought with a low down payment the mortgage may be higher than the current value of the home. I’ve seen other cases where the borrower bought the home with 20% or more for a down payment, but if they were to refinance now they would have to pay mortgage insurance. Another issue comes in with those who have a second mortgage or home equity line. When refinancing, the lender on the second mortgage needs to subordinate their mortgage to the new first mortgage, that is, they aren’t going to try and jump in line and take over the first position. This used to be almost automatic. Now it depends on the guidelines and position of the lender on the home equity loan. Still, there are a lot of people who will benefit from a refinance (no-closing cost refinance), and it makes sense to look into your options. If you have an FHA mortgage, you may have the easiest option with an FHA streamlined refinance. This mortgage offers no credit qualifying, often no appraisal and it can lower your payment by a lot. It is worth looking into.

If you are buying a home, the news is all good. With home prices down you get more home for the money, and with mortgage rates down your payment goes even further. If you are a first time home buyer (you haven’t owned a home in the last 3 years) you also can qualify for the first time home buyer tax credit, which means up to $7,500 off of your tax bill next year. As we come into the Holiday season, this is traditionally the slowest time of the year for real estate. If you are in the market and ready to buy, that means you have leverage and there are bargains to be had. The first step to buying a new home is to be pre-approved for a mortgage. Let me know if I can help.

One thing to watch out for if you are getting a mortgage at this time of year, especially a refinance, is how long your rate is locked in for. The sudden drop in rates means a big jump in volume for a mortgage industry that has been steadily downsizing. This means more pressure on appraisers, processors, underwriters and closers. Turn times will be longer, and with the holidays coming up, many people already have vacations planned and are working on short schedules in December. This makes a bigger impact on refinances because here in Illinois as in many areas of the country, you have a three day right of rescission ( a consumer protection giving you the right to back out of a deal after you have signed all the documentation). This means you will have to close your loan at least 3 business days before the lock expires. If someone is locking you in for 30 days or less, you will have to close before Christmas, and with the extra volume that may be a problem. I am locking all my refinances in for 45 days just for insurance and peace of mind. Purchases can be quicker, and we give priority to purchases.

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      5.375%      5.566% APR

15 Year fixed Rate     5.125%      5.288% APR

5-1 A.R.M.                 5.375%      5.537% 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.                 5.875%       6.059% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate      5.375%      6.047% APR

With no origination fee – 60 day lock

30 year fixed rate      5.75%      6.055% 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.

Illinois Home Mortgage Rates and News             First time home buyer loans

                               Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

Over the last month, mortgage rates have been stuck in a narrow range. All the news coming out about the economy was consistently bad, which is usually good news for lower mortgage rates, but the bond market was stuck and rates didn’t budge. A big part of the problem has been lack of investor confidence,  even though Fannie Mae and Freddie Mac are now fully backed by the government. Over the last months since the credit crisis hit, the Fed and the Treasury have been trying to get mortgage rates down. In order for the economy to recover, housing has to recover and lower rates are a big part of the solution. But even as the Fed lowered short term rates all the way down to 1%, the mortgage market wouldn’t bite and the spread between mortgages and short term rates hit an all time high. The good news is that this changed yesterday.

The Fed announced yesterday that they will buy up $600 billion worth of mortgage backed securities from Fannie and Freddie. This announcement triggered a huge rally in the mortgage backed securities market, and mortgage rates dropped yesterday to their lowest point in the last year. We’ve seen similar moves two other times this year, and both times the low rates were only around for a short time before disappearing. Yesterday the best rates were earlier in the morning, then the market pulled back and lenders re-priced for the worse. Still rates are much better than they have been in some time. I expect we will see a lot of volatility, but there is reason to believe that rates will stay lower this time. Maybe.

This is great news if are in the market for a new home, or if you could lower your bills by refinancing your mortgage, you.  Lower rates mean lower payments, and extra money in your wallet now is a very good thing. If you would like to check on the current rates for your personal situation, let me know.

Illinois Home Mortgage Rates and News             First time home buyer loans

     Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

Welcome to Illinois Mortgage Rates and News week in review for the week ending November 21st, my take on the week’s financial news and how it affected Illinois mortgage rates.

The markets are still in turmoil and fear is still the ruling emotion. The two big stories on the financial markets this week were the anticipated bailout of the big 3 automakers, and the news that mega-bank Citigroup is now on the ropes. The auto makers have been on a downward slide for years, and their collective decisions to base their fortunes on SUVs took a hit when gas prices soared. They have made a lot of bad decisions over the years, but it wasn’t the gas prices that pushed them over the edge, it was the credit crunch. Car buyers have disappeared, and those who are in the market are having a harder time coming up with financing. With no sales the auto makers are rapidly running out of cash, and the only viable lender is the government. GM, Chrysler and Ford don’t get a lot of sympathy. They are big, bloated organizations who have been out of touch with the market for years. Because of labor and pension and health care obligations, their cost of doing business is higher than their competitors. The Bush administration doesn’t appear to want to step in and some critics say they should be allowed to fail. But if they did fail, the ripple effect could mean the loss of well over a million jobs, and a devastated economy in the upper Midwest especially. It is probably cheaper to keep them going then to deal with the mess if they don’t make it. The auto makers are hoping that the government will swoop in to rescue them. Chances are that a structured bailout will be arranged, conditional on their dealing with some of the problems that have festered over the years. An auto maker bailout makes sense in the short term, the question is if it would be enough to get them off of life support and make them stronger in the long run.

Citi has a different problem. Citi stock was in the 40s just a few months ago, now it is under $5 (this is junk stock territory). The crisis here started early in the week with the announcement that Secretary Paulson was moving on from his idea of using the TARP money to buy bad mortgages, and would hold out on spending the rest of the money allocated (about $325 billion) for the next regime to take over. One commentator described it as having the quarterback walk out of the game in the third quarter when no one was available to take his place. This was especially bad news for Citigroup which has a lot of toxic mortgage debt on their books, and was looking forward to pawning it off on the government. The stock went into free fall, and even a big infusion of cash from a Saudi investor wasn’t enough to pull it out. The stock recovered a little by the end of the day Friday, but the concensus is that it may not be able to make it on its own, will require big infusions of government money and there are fewer and fewer big banks that can take it on if it did fail.

New unemployment claims came in at 542,000, a huge and ugly number. The expectation is that unemployment will continue to grow and we will be in a downturn at least through mid 2009. One good thing that has come out of this is that prices for oil and other commodities are coming down. A few months back when Oil prices were in the $140 range, experts were claiming that it would surely go to $200 per barrel. It went below $50 this week. I’m not sure what the upshot of that is, besides knowing that many experts don’t have a clue and you can’t follow a trend line to infinity because at some point it will change. But I filled up my car for under $30 this week and did a double take when I looked at the pump. Some stations here in the Chicago area are now showing gas prices under $2 per gallon. This is good news in that gas prices effect nearly everything in our economy, and with gas coming down prices in general will follow. It also brings another fear, though. The Fed brought out the D word this week, Deflation, as being the biggest risk to our economy going forward. To battle deflation the Fed can cut interest rates, but the Fed funds rate is a t1.0% now, so there is not much farther they can go. The other solution is to pump more money into the economy. They’ve been doing this with out much effect so far. We are probably going to have to wait until Obama takes over in January before we see more of this. The current administration is done with leading and ready to move on.

In mortgage related news, Fannie Mae and Freddie Mac declared a moratorium on foreclosures between November 26^th and January 9. This will help distressed homeowners over the holiday season, and the hope is that it will give some an opportunity to do a work out on their loans so they can keep their homes. Mortgage rates were flat most of this week, then turning volatile again on Friday, swinging up, then down, then finishing with a slight improvement for the week. All the news continues to point toward lower mortgage rates. If the mortgage market was functional, rates would be considerably lower than they are now. But the markets have been wacky all year, so the old rules don’t apply. It does seem that mortgage bonds have been consolidating, and when that happens it usually means we are near a breakout in one direction or another. I think the odds are that rates are about to improve, but this isn’t a safe market to make bets on. If the rates do drop, be ready to make your move, whether buying or refinancing, because there is no guarantee that rates would stay low. If you have a mortgage with a rate in the mid 6s, chances are a refinance would help you out 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      5.875%      6.058% APR

15 year fixed rate      5.50%       5.664% APR

5-1 A.R.M.                 5.375%      5.537% 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.                 6.00%       6.173% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate      5.75%      6.267% APR

With no origination fee – 60 day lock

30 year fixed rate      6.00%      6.295% 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.

Illinois Home Mortgage Rates and News             First time home buyer loans

                               Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

A big part of the real estate market right now is made up of foreclosures and short sales. Foreclosures are bank owned properties, homes that are owned by the lender because the home owner couldn’t make their mortgage payments. Short sales are pre-foreclosure properties where the home owners owe the bank more than the value of their home. Foreclosures in the Chicago area used to be a tiny percentage of the homes sold. But over the last few years with the down turn in the housing market and the economy, the percentage has grown and this year foreclosures have exploded. It is a sad sign of the times that these homes are the most active part of the market. It is a real tragedy when a family loses their home (though a good percentage of the foreclosures are investments and speculations gone bad). It is also bad news for the community and a real problem for the bank that holds the mortgage or owns the home. But if you are in the market for a new home, buying a foreclosed property or a short sale can mean big bargains.

There are a lot of bank owned properties on the market, but short sales are the fastest growing segment. Earlier this year short sale properties were being negotiated, but the chances of their closing was pretty iffy. Banks would sit on the contracts for months at a time. Meanwhile the homeowners would get further and further behind and the home buyer would often lose interest in waiting and move on to another property. That situation has changed over the last few months. Banks have gotten more realistic about the market and have gotten much more aggressive in responding to short sale offers. What used to take months for an approval may now come together in a few weeks (still longer than a normal contract). Short sales can be a win-win-win. Good for the bank who holds the mortgage, good for the seller having trouble paying for the mortgage, and good for the new buyer.

From the bank’s perspective, the worst thing that can happen is when they have to foreclose on a home and take possession. Banks make their money by collecting mortgage payments, and a foreclosure means that they own a property that they don’t want, and aren’t equipped to take care of. It also means big legal fees, extra time lost, and lots and lots of expenses for a property that is worth less than what they originally made the mortgage for. Their motivation is to get rid of this problem as quickly and with as little cost as possible. A short sale means that they take a one time loss and they know exactly how much it will cost them. This avoids having to take the time and effort of going through the foreclosure process, less legal fees, and gets a bad loan off the books in a quicker time period. This is a win for the bank.

For the seller it’s a win too. A short sale is going to be a bad mark on their credit, but not nearly as bad as a foreclosure. A short sale stops the pain and brings a bad stage in their life to an early end. They can then work on rebuilding their credit and getting their lives back to normal.

The advantage for a buyer is that they have a chance to strike a real bargain with the bank. The price and terms are negotiable, and the bank’s feelings won’t be hurt if you come in low. So this can be a big win for the buyer. Short sales are done a little different than with a normal contract between a buyer and a seller. The buyer first negotiates the price and terms with the home owner, but then the contract must be approved by the bank that holds the mortgage. They can come back accepting the contract as it is, or they may make a counter offer. When making an offer for a short sale you may want to put in a time limit for a response.

Foreclosure and short sale properties are financed like any other real estate, but there are some specific needs to keep in mind. I’ll go over what to watch out for in my next post.

Illinois Mortgage Rates and News                              First time buyer loans

Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

In the mortgage business, there is always anticipation around this time of year as we wait for the new loan limits to be announced. I know, as far as excitement goes this is up there with waiting for the new phone book to come out. But this year the drama was a little more pronounced. The conventional loan limits (the maximum loan that will be insured by Fannie Mae and Freddie Mac,) have stayed the same for the last several years, and with home prices soft the betting was that they would stay the same again this year. And the betting on that count was right. The maximum loan for a single family home here in the Chicago area and throughout most of the country stayed the same at $417,000. In high cost areas (Hawaii and parts of California, mostly) the max loan limit actually went down. Earlier this year loan limits were raised in these high priced areas in order to help the real estate market and take up the slack as many Jumbo lenders stopped making loans. The Max mortgage in the high priced areas was $729,950, after the first of the year it will be going down to $625,500.

The conventional limits as of January 1st will be:

          General                         High-Cost 

1Unit           $417,000                        $625,500

2 Units        $533,850                        $800,775

3 Units        $645,300                        $967,950

4 Units        $801,950                        $1,202,925

The bigger uncertainty and anticipation was what would happen with FHA mortgages. Earlier in the year FHA raised their limits temporarily to $410,000 for a single family home. FHA used to be just a little slice of the mortgage market, but this year, partly because of the increase in loan limits and partly because of tightening conventional standards, FHA has become the number 1 choice for the majority of home buyers. Everyone expected that the FHA loan limits would go down, the question was how much. We now have the answer. Here in the Chicago area the max FHA loan for a single family home will be $365,700. This is based on 115% of the median home price in the area. Nationally the lowest max mortgages will be capped at $271,050 and in high priced area the loans are capped at $625,500 for a single family home.

Here are the FHA limits for the the greater Chicago area which includes Cook County, Dekalb County, Dupage County, Grundy County, Kane County, Kendall County, Lake County, McHenry County and Will County: 

1 Unit        $365,700

2 Units      $468,150

3 Units      $565,900

4 Units      $703,250

In other areas where 115 percent of the median house price is less than 65 percent of the Freddie Mac limit (which includes most of Down State Illinois), the FHA limits are as follows:

1 Unit       $271,050

2 Units      $347,000

3 Units      $419,400

4 Units      $521,250

Here are the limits in higher priced areas:

1 Unit        $625,500

2 Units      $800,775

3 Units      $967,950

4 Units      $1,202,925

If you are looking for a loan in a higher priced area, or if you are thinking FHA and your loan will be above the new limit, you might want to act fast. The old guidelines are good for mortgages that are entered into the system up until the end of the year. After that you will be subject to the new limits. If you have questions on the max mortgage for a specific location, give me a call.

Illinois Mortgage Rates and News                              First time buyer loans

Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

Happy Veterans Day, and I’d like to thank all the veterans and active duty military for their service to our country. As a veteran or active duty military, one of your best benefits is the VA (Veterans Administration) loan. This is the original, and last surviving 100% loan. Since the end of World War II, VA loans have allowed qualified veterans to get a piece of the American Dream and buy a home of their own with out a down payment and with easier qualifying standards than with conventional mortgages. This loan is now more important than it has been in years. As more and more veterans separate from the service after action in Iraq and Afghanistan, this will be a great way to take advantage of the lower home prices and buy a home at terms they can afford. Some of the features of the loan are:

• Can be used for a single family home, town home or an approved condominium.
• 0 down payment – The VA loan offers 100% up to the maximum benefit of $417,000. You can use the VA benefit for loans above this amount with a lower down payment than you would need for conventional financing.
• No mortgage insurance – There is no mortgage insurance with a VA loan. They do have a one time funding fee which can be added into the loan and financed over the course of the loan. This funding fee varies according to your service and whether you have used your benefit before.
• Competitive interest rates – The rates for VA loans are not set by the VA, but by the bank making the loan. This means that the rates move up and down with normal market fluctuations and are competitive from one lender to another. The rates for a VA mortgage are similar to FHA rates. Considering that these loans are with no down payment and with no mortgage insurance, they are the best bargains available.
• Low closing costs – Closing costs for VA loans are similar to other loans. As part of your purchase negotiation, you can also ask for a credit from the seller to pay for all the closing costs associated with purchasing the home.
• Easier qualifying standards than with conventional financing – VA loan guidelines are focused on making sure that the veteran is able to make the payment and isn’t going to get themselves in trouble or over their head. But they do allow for more lenience in credit. They don’t go by credit scores (They do allow automatic underwriting approvals) but want to see a history of the veteran meeting their obligations. It is okay if the borrower has had credit problems in the past, but they want to see no major problems in the past year. VA is also flexible with debt ratios and how much of a payment the veteran can afford.
• VA loans are assumable – This can be a real benefit if you are going to sell when rates are higher. The new buyer can take on the existing loan at the existing interest rate, which could be a real advantage for you down the road. VA loans also have no pre-payment penalty, so it won’t cost you more if you need to sell or refinance.

Qualifying for a VA loan is similar to qualifying for any other type of mortgage. We will look at your credit, your income and debts, your job history and the expectations for your continued employment. We also need to verify your military service and your eligibility for VA financing. We do that through a VA Certificate of Eligibility, which we can get as part of the loan process. In order to get a VA approval you will need at least these items:

• A copy of your DD214 discharge papers.
• Certificate of eligibility (or we will get it as part of the loan process).
• Past 2 years W2s.
• Current pay stubs for the past month.
• Current bank statements for the previous 2 months.
• Other items depending on your own personal situation.

There are a few things to watch out for with VA financing:

If you are buying a condominium, the condo needs to be on the VA approved list. An FHA approval doesn’t work and there is no spot approval process like there is with FHA. This can put a real limit on what you can look at as most of the VA approved condos are older properties. If you want to see what condos are available in your area, let me know and I will send you a list.

Only veterans and their spouses are eligible. If you are buying with someone other than a spouse, and they aren’t a veteran, you can qualify only with your income and close only in your name.

Residual income. VA loans have one ratio, 41% of your income for your housing payment and any debt. You can stretch beyond that ratio, but you will need to show that you have enough money budgeted to pay for all expected expenses. The VA has a formula for these expense and you will need to meet the residual income requirement in order for your loan to be approved.

If you are a first time home buyer and thinking about buying soon, there is one more thing to keep in mind. The Government is offering a tax credit of up to $7,500 if you purchase a home before July 1^st 2009. This means you can buy a home with no money down, and get a credit against your taxes for up to $7,500 next year. (The credit does need to be paid back over the next 15 years, but it is still a great deal.

If you have any questions on VA loans in the Chicago area or across the country, give me a call. I will be glad to help.

Illinois Mortgage Rates and News                                                                   First Time Home Buyer Loans

Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

Welcome to Illinois Mortgage Rates and News week in review for the week ending November 7th, my take on the week’s financial news and how it affected Illinois mortgage rates.

The big news this week was the election. After what has seemed like an eternity it is finally over. Now we have a break from negative ads for about a year before the congressional races start again. But now with Obama as our new President Elect, there is a little less uncertainty out there and we at least know who our leader is going to be going forward. This has already helped stabilize the markets. The waiting game is now focused on who he will pick for Secretary of the Treasury and what he plans to do about the economy. He has already said that the first priority is to put together a new stimulus plan. The first stimulus plan where the government sent everyone checks was a complete bust. This stimulus plan is expected to be tied to increasing jobs and building infrastructure. The advantage of this approach is that at least we will have something to show for it once the money is spent.

The news on the economy continued to be bleak, but there are real signs that the credit crunch is easing. The Libor rate, which spiked to nearly 5% when the credit crunch hit in October, is now down in the low 2s. This is a big benefit for anyone who has an adjustable mortgage that is about to convert. Now the conversion rate is likely to be in the low 5s rather than above 7 like it was a month ago. Other indicators are also showing the panic lifting in the credit market, though banks are still holding onto money rather than lending it out. The TARP program, also known as the bank bailout, was put into place to recapitalize the big banks and get them to start loaning money again. It looks like their plans for now are to hold onto the cash or use it for buying new companies. I’m not sure how this will change, but it will need to in order for the economy to recover. Overseas the British and European central banks both cut rates. With global rates low and so much money being pumped into the economy, lending should pick up over time.

Like I said before, the other economic news was pretty bleak. Ford and GM announced quarterly losses of 2.5 to 3 billion dollars. GM is losing money at the rate of about a billion per month and they expect to run out of cash next year if it continues like it is. The auto industry will be the next big bailout. The employment report came in at a loss of 240,000 jobs, a downward revision on last month’s report showing more jobs lost and the unemployment rate rising to 6.5%. Job losses are accelerating, so it is going to get worse before it gets better.

There is good news on mortgage rates. Mortgage bonds have been fluctuating wildly and rates had risen over the last month even as all the fundamental factors pointed toward lower rates. On election day the mortgage bond market went wild with a rally of 113 ticks, a vote of confidence in the end of election season and knowing someone new will be in charge. Rates were off a little at the end of the week, in spite of the employment report which in a normal market would have caused rates to drop further, but we have seen about a 3/8s improvement in mortgage rates for the week.

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%        6.167% APR

15 year fixed rate      5.625%      5.728% 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.                 6.125%     6.239% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate      5.875%    6.327% APR

With no origination fee – 60 day lock

30 year fixed rate      6.125%    6.395% 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.

Illinois Home Mortgage Rates and News             First time home buyer loans

                               Do you Twitter? For daily mortgage updates, follow me at @PTmortgage

The Chicago area has been in the spotlight this week with the election of Barack Obama as our next president of the United States. As a Chicago area resident I’ve had a first hand look at Obama before he was on the national radar, and I’ve followed him closely as he reached national prominence. In my own little brush with greatness, I had the chance to talk with him for a few minutes 4 years ago when he was first running for the senate. He came off as smart, approachable and down to earth guy with an easy sense of humor – a scaled down version of how he is in front of the huge crowds. I’m proud to have him as our president and I have hopes for what he can do for our country in the future. One of the questions I’ve been asked a lot over the last month was what would happen to the real estate markets and what will happen with interest rates with an Obama’s victory?

In the long run we don’t know, but we’ve already seen one big change already. This hasn’t really been a result of an Obama win or anything he has said or did, it is more a matter of how the uncertainty before was adding to the market’s stress. Love him or hate him, we now know who is going to be in charge for the next four years, and that reduces the stress. I didn’t expect any quick change as a result of the election. The polls consistently predicted an Obama victory, so I figured that everyone already expected that result and it was already baked into the cake as far as the markets were concerned. On that note at least I was wrong.

The real estate market had dropped off a cliff after the credit crunch hit, and with home buyers nervous about the future I didn’t think that the election would affect that one way or the other. But on Tuesday, election day, my phone rang off the hook, many of the calls were from people I hadn’t talked with in months who suddenly had offers on their properties or were about to make offers on a new home. A similar situation occurred on the mortgage bond market. Election day set off a huge rally and over the last few days rates have dropped to their best point in the last month. It turns out that even though most people expected the result, uncertainty has made a big difference in people’s attitudes, and knowing who is going to lead us for the next 4 years has taken away one layer of risk.

Going forward what is happening in the economy will have the biggest impact on both the real estate market and the direction of interest rates. We will see who Obama picks for his economic team and what policies he is able to put into place and these will all effect the direction of the markets. But for now, after floundering about with a lame duck who never quite seemed in control as the economy sank, just knowing who our new president is going to be has added a little confidence to the markets.

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 31st, my take on the week’s financial news and how it affected Illinois mortgage rates.

I hope you’ve all had a Happy Halloween. Last year I bought what I was sure was going to be plenty of candy for the trick-or-treaters, but around 7:00, after a  big pack of kids came by, we were nearly out of supplies. My goal is always to get through the night without too much leftover candy. I try not to have too many sweets around as we can all do better without them, but I hated the idea of being one of those guys who didn’t have candy when kids came by. I ended up racing out to the store for reinforcements. And, of course, we didn’t have another visit the rest of the night. This Halloween I decided I was going to be better prepared and bought one more bag than I had last year. The evening started out slow with no one coming by until well after dark. I live in an older neighborhood with bigger lots and longer driveways. It seemed for a while that kids were bypassing our area for a close by subdivision where the homes were closer together, which means a shorter walk for treats and more candy in less time. With no one coming by I thought that might be the case again this year. Then everyone came at once. They were in there own smaller groups, but all the groups hit at the same time. Supplies ran low again, I panicked and sent my son out for more treats. And, again, that was it for the night. Now we have several pounds of excess candy which I will eat, and regret. It turns out my original prediction was just about dead on, but I panicked and figured that the flood of kids would keep on coming.

I think we are starting to see the same thing in the markets now. In the last few weeks since the credit crunch hit, the over all sentiment on the economy and nearly all the markets has turned down right gloomy. The Consumer confidence index came in this week at 38, much lower than expected and the lowest reading since they started the index back in the 1960s. The stock market rallied this week, but even so the drop over the last month has been staggering. The news on the housing front has been similarly bad. On a year over year basis foreclosures are up sharply and values are down. The talk is that we are starting or possibly hip deep in a recession that may be much more serious than any we’ve seen in years. There is no doubt that these are scary times, and I expect that things will get worse before they get better. But it is also clear that we are still in panic mode and the markets usually bottom out long before the economy improves. I’m thinking we are much closer to the bottom than most people realize.

Just a couple of months ago the biggest fear was inflation. Oil prices were up to $149 per barrel, and there were predictions that it would hit $200 within the year. Oil closed Friday at around $68 per barrel. The drop in oil and other commodities works like a pay increase to most consumers, paying less for gas gives them a little more for other expenses. Then you look at all the money that has been pumped into the economy over the last few months through the government’s drive to contain the credit crunch and avert the worst of the down turn. So far we haven’t seen much benefit from this huge infusion of money, but in the long run this will have an effect. There are signs that the credit crunch is slowly easing (the Libor and the Ted spread are coming down). Some of the panic is psychological. The election is just a few days away, and I think that everyone is anxious to have the election over, and having a new leader should boost confidence in the future. If the polls hold out and it is Obama, he has promised a $300 billion stimulus plan which would send money to strapped state governments, and build big infrastructure projects. This is aimed at getting more jobs and more money flowing. Expect more programs like this to come.

The Fed this week lowered their Fed funds rate down to 1%, the lowest it has been since 2003 and 2004. The problem now isn’t that money is too expensive, but that banks are still afraid to lend. But all these signs point to a change coming. The combination of low rates and all this money being spent should do the job of priming the pump over time. There are other bits of good news out there. The US is still considered the safe haven for global money, and as the wave of panic crested globally, money flowed into dollars and T-bills. So even if we don’t have confidence in our economy, global investors still do. Some astute commentators are saying that we are near the bottom in the stock market (others say we have a ways to go yet). In the real estate market, home sales were up over the previous month in September and inventory actually fell. This was before the credit crunch really hit, so my guess is the October number won’t be so good. But what this does mean is that there are a lot of buyers out there, mostly first time home buyers without a home to sell, who are seeing the market as a bargain, and waiting for the right time to jump in. When ever the government sets monetary policy they have a tendency to overshoot. Right now deflation is the biggest concern, but down the road, with a few trillion more dollars pumped into the system, inflation could be the biggest problem. We are hitting the time of year when home sales naturally slow down, but I think there is a good chance that this winter could be the bottom of the market.

Mortgage rates are still trying to find direction. Mortgage bonds were worse most of the week, but after hitting a support level near their worst point for the year, they started to improve. All the indicators point toward lower mortgage rates and if this were a rational market rates would be considerably lower. But we are still in an irrational market where investors are afraid to own anything, so it may take some time before things normalize. If you are in the market for a mortgage, give me a call and I can help you figure out not only your qualification, but also help you with the timing and picking the right time to lock in your mortgage.

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      6.375%      6.548% APR

15 year fixed rate      6.00%      6.137% 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      6.25%    6.727% 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.

Illinois Home Mortgage Rates and News             First time home buyer loans