Welcome to Illinois Mortgage Rates and News week in review for the week ending December 5th, my take on the week’s financial news and how it affected Illinois mortgage rates.

It’s a year late, but the news is that it is official, we are in a recession. But you probably already knew that. The National Bureau of Economic Research, the official arbiter of these things, came out with the official declaration that the recession started last December. As a friend of mine said, that has to be a great gig. It’s like a weatherman who tells you what the weather was like yesterday. Or someone who tells you not to step in the wet cement, after your foot is already stuck. I’ve been in a football pool for years, and I know that my winning percentage would be much higher if I could pick the winners after they played the games. We are in a recession and from all signs, we will be in this for a while.

The latest news to confirm this was the release of the employment report Friday morning. Everyone was expecting a bad number, companies have been shedding jobs with gusto in the last several months. The expectation was for losses of over 300,000 for the month of November, which would have been bad. The real number came out at a loss of 533,000 jobs, a devastating report. The previous two months were also revised downward, so over the last three months the economy has lost over a million jobs. Retailers usually get their biggest bump for the year in the Christmas season, but it is pretty clear that this will be a gloomy season for holiday sales.

On the bailout front, the Big 3 automakers were back for another try. This time they drove themselves up in cars, and laid on the humble pie. They are all short on cash, and unable to get credit, there is a real risk of failure. There is no telling if they can change their focus and become viable long term, but if any of them were to go out now, it would be a disaster. The job losses from a failure piled on to the jobs already lost, would stress the economy even more and cost the states a fortune in unemployment. Some economists say the bailout makes sense as just a work program to keep people employed. The White House has been against using the TARP funds for the auto bailout, and other funds available won’t be enough. It looks like they will tap into some funds allocated for fuel economy to keep them on life support until the Obama team gets in and a bigger bailout will probably go through.

With all the bad news out there, fear is the biggest problem. Each piece of bad news makes both businesses and consumers pull back a little more, and as they pull back it insures that the next round of news will be worse. At the same time, the government is in limbo now as we face the transition to the new presidency. Trillions of dollars have already been pumped into the economy, and trillions more are on the way. But for now the old president is waiting to go  and isn’t coming up with new rescue plans, and the new president hasn’t taken over and can’t put anything into place until he does, so it is a waiting game. The cavalry is coming, but will they get there in time?

The one good sign amid all this gloom is that mortgage rates are dropping. Mortgage bonds are bouncing around in a channel, but interest rates are near the best they’ve been all year. If your mortgage is at 6.0% or higher, you would probably benefit from a refinance. A lot of people think that it costs a lot to refinance, but most of the refinances we do are with no closing costs and often with no money out of your pocket at all. If you are in an FHA mortgage, you can do an FHA streamlined appraisal with no credit qualifying and often no appraisal needed. If you are in a conventional mortgage you can benefit from a no-closing cost refinance. In a time when everyone watching their pennies, a mortgage refinance is a good way to save some dollars.

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      5.50%      6.147% 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.

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