Welcome to Illinois Mortgage Rates and News week in review for the week ending December 12th, my take on the week’s financial news and how it affected Illinois mortgage rates.

This is usually the time of year when business starts slowing down in anticipation of the Holiday season. This is usually the time for Christmas shopping and Holiday parties, and business productivity often takes a back seat to seasonal cheer. In most parts of the economy business is slowing down, but it isn’t a result of excess cheer. It’s still hard to find a parking space at the shopping mall, but too many of the stores are having going out of business sales, and the reports show there are more shoppers than buyers this year. When the news is all doom and gloom, more people feel anxious about their jobs and their financial well being, and are holding onto their wallets a little tighter than in years past. The one bright ray of hope in this dark scenario is mortgage rates. Mortgage rates fell again this week, and are now at the lowest point of the year.

The big economic news this week concerned the auto bailout plan. With auto sales tanking and credit dried up, the big 3 automakers are in a downward spiral. Reports are that they have only a few weeks of cash left to continue operations. There is no doubt that they will need more money down the road, but it looked like a plan was together to give them a mini bailout, so they had enough cash ($15 billion) to limp into the new year when a longer term solution would be the new president’s problem. The deal feel apart on Friday as some, mostly Southern, Republican Senators, played a game of chicken with the economy. The Big 3 have been in bad straights for quite some time, but it was the credit crunch that actually pushed them off the cliff. In order for them to be viable long term, they will need to refocus and get more concessions from the unions, dealers, parts suppliers and all the other parties that have a stake in their continued existence. That isn’t going to be an easy process, and it is going to take time if it has any chance of working. Pushing the Big 3 into bankruptcy would force the issue, but it would also cost the economy up to 1,000,000 jobs at the worst possible time. It now looks like President Bush will now release some of the TARP money, a position that he was against before, to keep the automakers going.

An unusual thing happened in the Treasury Bill market this week as short term rates dropped to zero – below zero when you consider transaction charges. The question is, why would someone buy treasuries if they are guaranteed to lose money? One answer is that with fear in the air Treasuries are the safest place to have money, and it is worth a small loss to know that your cash will be available when you need it. Another reason may be that this is a result of the big banks parking the money they got from the TARP fund, and they are willing to take the loss in return for high liquidity, rather than the risk of lending it out. This is an unusual occurrence, but we may be seeing this more often as rates bump along the bottom.

Mortgage rates have continued to drop and we are now at the best rates for this year, and the best I have seen in the 16 years I have been in the mortgage business. This could be a great opportunity to refinance your mortgage and lower your monthly payment – if you qualify. It used to be that every time the rates dipped it would mean a huge refinance boom. We are in another refi boom, but not everyone will see the benefit this time. Loan guidelines are stricter than they used to be and the no income verification and stated income loans are all gone. Property values are lower too, so even some people who had equity when they bought, may have a hard time refinancing. That being said, lowering your mortgage can be the equivalent of getting a raise at work. Depending on your loan size and how long you plan to stay in your home, you can save money even if your rate now is in the 5s. If your rate is above 6.0%, refinancing is probably a no-brainer. Most of the refinances we do are no-closing cost refinances (at a slightly higher rate than you could get if you paid the closing costs yourself) and often with no money out of your pocket at all, so cost shouldn’t be an issue. If you are in an FHA mortgage, you can do an FHA streamlined appraisal with no credit qualifying and often no appraisal needed.

Here is what Illinois Home mortgage rates look like today for an A+ (740 Fico or above), 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      5.00%      5.176% APR

15 Year fixed Rate     4.875%     5.069% APR

5-1 A.R.M.                 5.125%      5.246% 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.                 5.375%       5.598% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate      5.00%      6.034% APR

With no origination fee – 60 day lock

30 year fixed rate      5.50%      6.147% 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.

The Fed meets again next week and it is expected that they will drop rates again. As they approach zero, that removes the main weapon from their arsenal. More on this in next week’s edition.

Illinois Home Mortgage Rates and News             First time home buyer loans

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