Welcome to Illinois Mortgage Rates and News week in review for the week ending January 30th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

This was another ugly week in the economy, but by now that is expected. There is news every day of companies announcing new rounds of layoffs. More people are now receiving unemployment benefits than at any time since they started keeping track back in 1967. The stock market ended January with a drop of over 8% – its worst January ever. The consumer confidence index came in at 37.7, a new low. The GDP report released this week showed the economy declining by 3.8% in the 4^th quarter last year, the worst showing in 25 years. This was better than expected, but if you count the build up in inventories, the real number is a 5.1% and this is subject to revision which will surely drive the number lower. The expectation is that this wave is intensifying and this next quarter will be much worse.

Bad news on the economy is good news for mortgage rates, so rates should be down again, right? Not quite. Both the treasury notes and mortgage backed securities markets got killed this week, sending mortgage rates higher. So the questions are, what caused the route in the market, and does this mean rates are moving up for good?

Here are some theories as to why rates jumped higher this week.

1. Foreign investors are no longer interested in buying our debt. New Treasury Secretary Geitner accused the Chinese of currency manipulation this week, and some say that this means the Chinese will no longer purchase our debt. This could be, but they were active participants in the short term Treasury auctions this week, and with as much trouble as we have with our economy, this is a global recession and there are few other places for them to put their money. They also have a vested interest in our long term success as we are the biggest buyer of their exports.

2. It is a result of the stimulus plan. The thought of the government spending billions, maybe trillions, of dollars that we don’t have is a scary concept and this means inflation is right around the next bend in the road. Inflation We may see inflation again, but we have to get past where we are now, first, and deflation seems a bigger concern than inflation. No one else is spending money now, and if the government doesn’t step in to fill the gap, the economy will continue to deteriorate.

3. The government is overextended. We have already spent too much and with more money needed to stabilize the banks and get the economy moving, the markets no longer have faith that the government can handle the amount of debt it is writing and think that rates will have to go up to attract new investors.

I have my own theory – Markets are irrational and unpredictable, at least in the short run. Furthermore, markets hate uncertainty, and we are now in a very uncertain period. Markets are naturally volatile and over the last year they have been even more extreme in their volatility. Mortgage rates are up sharply, but some experts believe that mortgage rates will drop back down, and there are 2 big reasons for this.

1. Rates have been higher than they would be normally because all the wholesale lenders were caught by surprise when the rates dropped, and they had to ramp up their support staff to get through the backlog of new loans. With more business than they could handle, they kept their margins high to control the volume. Two of the biggest wholesale lenders who have been out of the market for the last month, are now back in the market and pricing aggressively. This means they are fully ramped up and ready for more business.

2. The Fed has made it its goal to get mortgage rates down to stabilize the real estate market. The Fed bought $16.836 billion in mortgage backed securities this week, mostly at higher coupons than in previous weeks. As of Thursday they have purchased just over $69 billion in mortgage backed securities out of a goal of $500 billion by the beginning of July. Here is a link to the New York Fed which tracks the Fed’s mortgage bond purchases. This number is updated every Thursday.

No one has a crystal ball that will accurately tell them where rates will be, but if rate do drop, be prepared to lock into a rate that works for you. Too many people didn’t take advantage of the low rates figuring that they would drop even lower. If you can lock into a rate and payment that will save you money and has a short payback period, it makes sense to take it rather than waiting for an even better deal.

In other real estate news, one feature of the new stimulus plan as currently written will eliminate the need for the $7,5000 tax credit to be paid back. The way it is now, the tax credit is good for any first time home buyer who buys a new home by July and the credit would have to be paid back over the next 15 years, at $500 per year. The new version of the credit would take away the pay back provision and let buyers file an amendatory tax return so they could get the benefit this year.

Here is what Illinois Home mortgage rates look like today for an A+ (740 Fico or above), full doc purchase or rate/term refinance on a 45 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      5.50%    5.615% APR

15 Year fixed Rate     4.875%   4.942% APR

5-1 A.R.M.                    5.125%   5.263% APR

For Jumbo loans over $417,000

7-1 A.R.M.                   5.375%       5.598% APR

(For Jumbo loans consider breaking your loan into 2 parts – conventional to the limit and a HELOC for the rest.)

FHA LOANS – 3.5% down payment

With 1 point origination fee – 45 day lock

30 year fixed rate      5.50%      6.023% APR

With no origination fee – 60 day lock

30 year fixed rate      5.875%     6.245% APR

FHA APR reflects 3.5% 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 Mortgage Rates                   First time home buyer loans               

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“What’s your Rate?”

I’ve been hearing that question a lot lately. If you are a rate shopper looking to refinance your mortgage (or if you just bought a new home and are looking to finance your purchase), this is probably the big question on your mind. But before I can quote a rate, I need to get some information, first. Some of the things I need to find out are:

What type of loan are you looking for? Is this a conventional fixed rate, an ARM, an FHA loan or a Jumbo loan?

What loan term are you looking for? In a refi market, like we are in now, many people want to keep their loan terms the same or pay their mortgage off quicker. The loan term is most often 30, 20 or 15 years, and the rate on a 15 year mortgage will be lower than a 30 year (but the payment will be higher).

How much do you want to finance? Mortgages are based on the size of the loan. There are price hits for smaller loans and price enhancements for the larger ones (up to the conventional limit of $417,000 for a single family home). So bigger loans are priced better than smaller loans.

Do you know your credit score? One of the big changes in the mortgage industry over the last year is that conventional mortgages rates are now linked to your credit score. The best rates go to those who have scores of 740 or better. Pricing is just a bit higher for those below 740 but above 700, but if your score is below 680 the hits can be big. FHA loans only have price adjustments if your credit score is below 600.

What is your home worth? What I’m looking at here is loan to value. If the mortgage is a high percentage of the value of your home this may affect your pricing. It also may mean that you would need to take on mortgage insurance. One of the realities of this market is that homes values have fallen. In some cases with the lower values, it doesn’t make any sense to refinance.

Are you taking any cash out? Depending on your loan to value, this can be another price hit. If you still have a lot of equity in your home after taking the cash out, it won’t matter.

Do you have a second mortgage or home equity loan? This matters for a few reasons. If you have a second mortgage and you are not planning on paying it off, we will need to subordinate it. This means the company that holds your second loan will have to approve the terms of the new first mortgage and agree to go along with the refinance. The risk to the new mortgage lender is that a second mortgage holder could try and jump into a first lien position while the new loan is closing, so we need to get an agreement anytime there is more than one mortgage. This used to be just a formality, but now second mortgage lenders are getting much pickier about what they approve, and what they won’t. If we need to get a subordination we need to allow for more time, and more time affects loan pricing. Also, if you took on the second mortgage after you bought the home, this is considered a cash out refinance, which may be another price hit.

What is more important, getting the best rate or keeping your closing costs low? The more you pay in points and closing costs, the lower the rate you will be able to get. But getting the lowest rate isn’t always the best plan. It can take years to pay off the extra closing costs based on the difference in your payments. This might be the right way to go, but if you don’t expect to be there long term, or if you think that rates could drop even lower, this might be a mistake. But many people have their eyes set only on getting the lowest rate. I talked with someone recently who was shopping rates and had just been quoted from a nationally known (big advertising) company. She was quoted an extremely low rate, but she would have to pay an additional almost $9,000 to get that rate. Focusing only on the rate can cost you money.

Do you escrow for your taxes and insurance? Many people would prefer to pay their own tax and insurance bills as they come due, rather than paying the mortgage company every month as part of your mortgage payment. If you have enough equity in your home this is an option, but there is a price hit for doing it. Some lenders charge less than others, but this is something we need to know upfront.

What type of property do you have? Fannie Mae recently changed their guidelines, and Freddie Mac is planning on following, so that condos will cost more to finance. This only applies if your loan to value is greater than 75% (less equity), but it means that condos are more expensive to finance than a single family home would be. The same thing goes for 2-4 unit buildings.

In order to get the mortgage that is best for you, we need to match the loan to your situation. Asking the right questions up front helps us get the situation right so you get what is right for you and avoid unpleasant surprises down the road.

Illinois Mortgage Rates                   First time home buyer loans                We Lend in All 50 States

Welcome to Illinois Mortgage Rates and News week in review for the week ending January 23rd 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

For much of the last year the markets see-sawed back and forth trying to decide which danger they should be most worried about, inflation or recession. For a time last summer when oil and commodity prices were soaring ever higher, it looked like inflation (or a hybrid stagflation) was gaining the upper hand. But over the last months as the banking system neared collapse and the economy spiraled down, it became clearer and clearer that our economy was in more than a garden variety slowdown, and this was a severe recession, or maybe something worse. With the whole global economy in a panic, and oil, housing and commodity prices falling, inflation looked like it was down for the count. But market sentiment dies hard. Even as the economy remains stalled, fear of inflation is again the big worry in the markets this week.

Much of the news this week revolved around the inauguration and what would now happen with the new administration in charge. The stimulus plan is the centerpiece of change for the economy and this is where most of the concern was directed. Some economists have criticized the plan for not being big enough, or for not getting the money out fast enough to get us moving again. But the markets this week are more optimistic. Market sentiment is that the stimulus plan will work too well. They fear it is too big, and it will cause us to overshoot and go from stalled to overheated. The question then is how do we pay for all this? And the answer is that we will crank up the printing presses and create more money, causing rampant inflation. This may be. But it seems a little like telling the firemen not to spray too much water on your burning house because you are worried about a flood. The truth is that no one knows what will work and what won’t. Inflation is the worry this week, but soon it will be something else. The one thing you can always count on is that markets are fickle and will change quickly.

Unemployment claims went up by 11.8% this week. Corporate earnings were mostly down and disappointing. Housing starts were lower than expected, and they were expected to be low. Overseas, the UK announced that they are officially in a recession, and China’s growth rate is decelerating rapidly. Bank of America and Citigroup received more federal TARP money this week, and Freddie Mac says they will need another shot of capital. So the economic news continues to be variations on a theme.

Mortgage rates this week have ticked up, but are still near historic lows. Rates will always fluctuate, but my guess is we are likely to remain in a range over the coming months. It is not only the bad news in the economy that is keeping mortgage rates low, but the fact that the Fed is in buying up mortgage backed securities in an effort to lower rates and get the hosing market moving. As of Thursday they have purchased just over $52 billion in mortgage backed securities out of a goal of $500 billion by the beginning of July. If you are thinking of refinancing or buying a new home, this is may be a once in a lifetime chance to get a low, low rate. The Fed is the big gorilla in the market now. When they stop buying, rates are likely to rise. Here is a link to the New York Fed which tracks the Fed’s mortgage bond purchases. This number is updated every Thursday.

Here is what Illinois Home mortgage rates look like today for an A+ (740 Fico or above), full doc purchase or rate/term refinance on a 45 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      5.25%    5.384% APR

15 Year fixed Rate     4.75%   4.836% APR

5-1 A.R.M.                    5.125%   5.263% APR

For Jumbo loans over $417,000

7-1 A.R.M.                   5.375%       5.598% APR

(For Jumbo loans consider breaking your loan into 2 parts – conventional to the limit and a HELOC for the rest.)

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate      5.00%      5.928% APR

With no origination fee – 60 day lock

30 year fixed rate      5.50%      6.023% 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 Mortgage Rates                   First time home buyer loans                We Lend in All 50 States

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

If you were looking to refinance your mortgage but were waiting for rates to drop further, the market has not been cooperative this week. Over the last 5 days mortgage rates have ticked up nearly a half a point in rate. Mortgage rates are still attractive, and they are at a level that will help a lot of people lower their payment and improve their budget. But they aren’t in that all time low, brag to your friends that your mortgage broker is a rock star range that they were before. So does this mean you’ve missed the boat and it’s too late to refinance? Was this another short term boom that is quickly going bust? Maybe, but I wouldn’t bet on it.

The truth is that no one knows for certain what is going to happen to mortgage rates on a day to day basis, and the markets have been volatile all year. But mortgage rates are based largely on activity in the mortgage backed securities markets, and these, like all markets, are driven partly by the underlying fundamentals, and partly by emotion. The fundamentals show the economy is stalled and we are in a severe recession with more than a hint of deflation. On the other hand, the emotions are more forward looking. The worry now is that the Obama stimulus package will be too big, and Ben Bernanke will be too loose with the money supply and that before we know it inflation is going to be out of control. This could happen. An economy as large and complex as ours is not an easy thing to manage. In the past Fed easing has often gone too far and rounds of loosening often lead to cycles of tightening to reign in inflation. But worrying about inflation now seems a little strange.

Right now it is like we are in a car trying to make it up a steep hill but the engine is stalling. We need to hit the gas hard and get the motor revving or the engine will die and we will roll all the way back down the hill and spend way too much time in an unpleasant valley. If we do step on the gas there is a chance that we will go too fast and lose control. But if we ease off on the accelerator as we near the top, and put on the brakes as we start heading down the other side, we should remain in control. After we crest the hill we may need to stand on the brake as inflation comes to life, and that promises to be just as scary as the situation we are in now. But we are now in a global recession and our major problem is how we are going to make it back up that steep hill. At some point we will need to worry about inflation and rising interest rates, but that is tomorrow’s problem.

This is obviously an oversimplification of the situation. There are other factors affecting mortgage rates (like wholesale lenders who are booked to capacity so they are keeping rates higher than they would be otherwise) and if markets were so easy to predict, we would all be billionaires. But I won’t be surprised if some of these same people who are screaming inflation now, have a change of heart down the road (think of oil prices this summer, and where they are now). If you are thinking of refinancing, the best thing you can do is get your papers together and start the process moving.

Illinois Mortgage Rates                   First time home buyer loans                We Lend in All 50 States

                               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 January 16th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

January, for me, has always had a split personality. As the first month of the year it is a sign of new beginnings and fresh starts. January is the time when everyone takes on their New Years resolutions. The gym is always filled with new faces, diets are started and bad habits are discarded, at least for a short time. But it is also the coldest, bitterest month of the year (some say February is, but February has the advantage of being a short month, and it is followed by March where we at least have hints of Spring). This week we see signs of both sides of the split personality. The weather here in the Chicago area was (and is) miserable. Too much cold and wind chills of 30 below are keeping people inside. But this year along with all the bad news on the economy, we are about to have a new president in the White House. The country is ready for a change (59% of Republicans are looking forward to Obama taking office) and a new figurehead at the top may help to restore confidence. Having a whole new financial team can’t hurt, either.

The economic news releases this week all confirmed what we already knew. The economy is stalled out and sliding backwards. Retail sales for December came in worse than expected – and they were expected to be bad. The Fed’s Beige book showed slowing economic activity throughout the country. But on the good side, inflation has tamed. The CPI and PPI (consumer and producer price indexes) were both released this week and they showed inflation at the lowest levels since the 1950s. It’s hard to believe that just a few month’s back, many experts were worried about run away inflation. A lot of this is due to the drop in oil prices (now down to $36 a barrel), but the low prices are spreading to all other classes of products.

Financial giants Bank of America and Citigroup came out with more bad news this week. B of A gets a bailout of another $20 billion as the firm still can’t handle the indigestion from the purchase of Merrill Lynch (which was government assisted at the time). Citi, after losing another $8.29 billion dollars in the 4^th quarter, is about to be split into 2 parts, one, part focused on banking, and the other on brokerage, financial management and overseeing their portfolio of around $300 billion in toxic assets. This would bring value to the banking side, and make the other half the evil twin. These developments suggest that even with all the TARP money spent, the big banks are still in crisis, and are not ready to turn on the lending spigot.

On the mortgage rate front, interest rates are slightly higher for the week, but we are still near all time lows and in the middle of a huge refi boom. Mortgage bonds have been going back and forth in a trading range, but sold off Friday nudging rates higher. Part of this is due to the long weekend effect. Monday is Martin Luther King Day and the bond market is closed. It is common for traders to unwind positions in anticipation of a long holiday. Part of the sell off may have also been due to money flowing out of bonds and into stocks. The question is, is this a trend, and are rates about to head higher? I don’t think so. The refi craze took off at the beginning of this year when the Fed followed through on their promise to start buying mortgage backed securities in order to lower mortgage rates. They’ve committed to buying $500 billion between now and the end of June. This means that they are the big gorilla in the market, and my guess is that rates will stay in a low range for the next several months. There will be fluctuations in that time, and anyone trying to catch the bottom may be disappointed. Bottoms don’t last long. But if you are thinking of refinancing this is a once in a lifetime chance to lower your payments. Here is a link to the New York Fed which tracks the Fed’s mortgage bond purchases. It will be updated every Thursday.  

Here is what Illinois Home mortgage rates look like today for an A+ (740 Fico or above), full doc purchase or rate/term refinance on a 45 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%    5.179% APR

15 Year fixed Rate    4.625%   4.772% APR

5-1 A.R.M.                  5.00%      5.146% APR

For Jumbo loans over $417,000

7-1 A.R.M.                 5.375%       5.598% APR

(For Jumbo loans consider breaking your loan into 2 parts – conventional to the limit and a HELOC for the rest.)

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate      5.50%      5.739% APR

With no origination fee – 60 day lock

30 year fixed rate      5.75%      6.010% 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 Mortgage Rates                   First time home buyer loans                We Lend in All 50 States

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

Here in the Chicago area it is about 10 degrees below zero, the coldest night of the year. But I’m starting to see signs of Spring. Well, maybe not Spring, but I do see signs that we are going to have a Spring buying market this year. Traditionally January is the slowest time of the year in the real estate and mortgage market. The mortgage business is quite lively now with low rates and a major refinance boom, but purchase loans are still scarce. And yet, signs of a purchase market abound. For one thing I’m getting calls and contacts from buyers who are just testing the waters, finding out what they need to do to be prepared to buy a home this year. For another thing we have a nearly perfect storm for a strong buyers market, but this year it will be much different than the traditional Spring market.

Traditionally, the Spring market starts up sometime after the Super Bowl (weather permitting), when the first time home buyers start filing their income tax refunds. It is the first time home buyers buying the starter homes that sets off a chain reaction of buying and selling which starts at the lower price ranges and moves up to the top as homeowners sell and trade higher. I don’t think that will happen this year. This year I expect we will have a robust market for first time home buyers. Move up buyers? Not so much.

Here is why I think this is going to be a big year for first time home buyers:

• Pent up demand – The last few years first time buyers have mostly sat out the season, scared off by bad news and high home prices. There is pent up demand for new homes, but they aren’t just looking for any homes, this year they are looking for bargains.
• Bargain prices – Home prices have rolled back to values we haven’t seen in years, and home buyers can now buy homes that were priced too high for their budgets a few years back. We are now in a true buyer’s market, and home buyers are expecting the sellers to help with their closing costs or to offer other price concessions.
• There is a surplus of short sale and foreclosed properties on the market –I expect this to be the biggest part of the market. Last year we had a real increase in properties that were foreclosed, or home owners who were in trouble. For a long time the banks that owned or had an interest in these homes weren’t interested in giving them away for any less than what they were owed on their mortgage. As the inventory piled up, it seems like the banks have had a change of heart. Now the name of the game is ‘Let’s make a deal’.
• Low interest rates – Mortgage rates now are at historic lows. This means that a home buyer can afford a larger home for less of a mortgage payment. Mortgage guidelines have tightened, and it is harder to get a conventional loan, but FHA mortgages are available with just a 3.5% down payment (and that can all be a gift).
• Tax incentives – The Government is offering a $7,500 tax rebate (actually a 15 year no interest loan) for first time home buyers who buy a home prior to July 1^st of this year. Free money is a great incentive, and I think this, along with other incentives, will be effective.

So first time home buyers have a lot of reasons to buy now, and they will help the economy in the long run by picking up some of the foreclosed and short sale properties that are now excess inventory on the market. This will solidify the base and help home prices in the long run. But it won’t help nearly enough move up buyers sell their homes. So what is happening with these potential move up buyers? Most of them are biding their time. They don’t want to sell when prices are down, so they will wait until home prices have recovered (even though they will then have to pay more for their new home). In the mean time, those who can qualify are saving money by refinancing their current mortgage.

Illinois Mortgage Rates                   First time home buyer loans                We Lend in All 50 States

                               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 January 9th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

Mortgage rates fell this week and are now at the lowest level in generations. Not years. Not decades. Generations. This is good news if you are able to refinance your mortgage or are in the market for a new home, but the reason these rates are so low is because the economic news is so grim. The unemployment numbers released yesterday were just as bad as everyone expected (though better than some had feared) with a loss of 524,000 jobs in December and a total of over two and a half million jobs lost in 2008. The unemployment rate is now at 7.2% and many experts say that with so many people working part time and those who have given up looking, the real number is higher. Like I said, the news is grim. But bad news for the economy translates to good news for mortgage bonds, and that means lower mortgage rates.

Another reason that rates improved so much this week, was because the Fed, in a move to stabilize the housing market, stepped in and started to buy mortgage backed securities. Rates first started going down in mid December when the Fed announced that they would buy $500 billion of these bonds by the end of June. This week they are off to a good start, with a purchase of $10 billion for the week. Continued buying may drive the rates lower, but with the lenders pipelines full to the point of bursting, it’s doubtful that they will pass the savings on to consumers any time soon.

We are in the midst of a huge refinance boom and this changes the way that the whole industry does business. Over the last year volume was down and the goal was to cut costs and operate lean. The fat was cut out of the system, then the muscle, then the bone. Mortgage support people left for new careers and the industry was downsized to fit the market, which was driven mainly by home purchases. The lower rates mean that people who never dreamed that they would refinance again, thinking that rates hit rock bottom back in 2003, are now back in the market for a new mortgage. So now appraisers who were taking a week to get an appraisal done, are now taking a couple of weeks. Loan processors are trying to manage a pipeline that has at least tripled or quadrupled overnight, and underwriters are finding that there aren’t enough hours in the day to get everything done. As the wave moves through, loan closers will get overwhelmed and the title companies will run out of times available to close the loans. Eventually the industry will catch up, but no one wants to bring on new people unless they know that they have to. They are at a point now where they have to, and there are good people available, but it will take some time before the system balances out.

So what does this mean to you as a consumer? For one thing, if someone offers you a rate and it is locked in for 30 days, chances are you’re not going to close on time. Mortgage rates are priced based on how long the rate is guaranteed. The longer the guarantee, the better the pricing, so a 30 day lock is priced better that a 45 or 60 day lock. But it takes time to close a loan in the best of times. There are a lot of moving parts in the mortgage process, and if one part gets delayed, it effects everything else. Take out the weekends and that 30 day lock is considerably shorter, and by Illinois law there is a 3 business day right of rescission (after closing, when you can decide that you don’t want to go through with the loan), which cuts more time out. If your lock expires before your loan is funded, the rate you were quoted disappears. In a time like this it is best err on the side of caution. I’m locking most loans for 60 days now, to make sure they get done without a problem.

Here is what Illinois Home mortgage rates look like today for an A+ (740 Fico or above), full doc purchase on a 60 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      4.875%    5.086% APR

15 Year fixed Rate     4.50%      5.046% APR

5-1 A.R.M.                   5.00%      5.146% APR

For Jumbo loans over $417,000

30 year fixed rate   * 6.75%      6.827% APR *

Special pricing requires 20% 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%      5.784% APR

With no origination fee – 60 day lock

30 year fixed rate      5.50%      5.739% 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 Mortgage Rates                   First time home buyer loans                We Lend in All 50 States

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

I think it is safe to confirm that we are now in a major refinance boom. We’ve had a few mini booms over the last year, but these were occasions when the rates dropped to a low point, but the low rates only lasted for a short time, in some cases a matter of hours. This boom looks different, much more like the refinance craze in 2003 when rates dropped to a level where nearly anyone who had a mortgage would benefit by refinancing. Mortgage rates are at historic lows, and anyone who can qualify is likely to benefit. But with all this volume coming in to an industry that has been feverishly downsizing over the last year, there are bound to be some problems. While it is great to get the lowest interest rate, it won’t help you if you are not able to close on time, or if you can’t close under the terms you agreed on.

Here are some things to be aware of when you are shopping for a loan and how this refinance may be different than how it has been in the past:

1. The systems are overwhelmed, and the wave is still cresting. Closing a loan is an assembly line like process. It takes a number of steps where everyone has a specific job to perform. Most of your communication will be through your loan officer, but there are many people involved in getting the loan completed: processors, appraisers, underwriters, closers and title agents. If any one of these people have a problem or get behind, it effects the entire loan flow. This means that you need to allow for extra time to close.
2. Because of the loan surge, watch your lock-in time. When you lock in a mortgage, you are locked into your rate for a set period of time. This means that your loan needs to close within that time frame or the promised rate is gone. If some one is quoting you with a short rate lock, take it with a grain (or gallon) of salt. If you don’t fund your loan within the lock period, the lender will either have to extend your rate (Which costs them money) or if the rates have gone up, you will get the higher rate.
3. Check to see when you can lock in your loan. Some companies show great rates, but you can’t lock in until your loan is approved and ready to close. At that time rates will have changed. They might be better, they might be worse. The risk is all on you.
4. The best rate is not always the best deal. You have to look at not only the interest rate, but the costs and the terms. All lenders are getting their pricing from the same sources. If someone is quoting a rate lower than the market, they have to be making up the difference by charging more fees and points (or just making up the rate and hoping the market catches up to where they said they locked you in). Make sure you compare apples to apples. Get a Good Faith Estimate and make sure that any fees will be paid off by the savings on your loan in a reasonable period of time.
5. Underwriting and documentation requirements have changed. Many people who took out their loan more than a year ago, did so with minimal documentation of income and assets. Those days are gone. In order to qualify for a loan you will need to prove that you can afford the loan. This means providing paystubs, W2s and bank statements.
6. There are more loan level adjustments depending on your situation. Mortgages used to be a one size fits all commodity. Now there are extra pricing hits depending on your credit score, your loan to value, the type of mortgage you are getting and the type of property. So each loan quote is specific to your situation.
7. Home values have dropped. If you bought your home over the last few years, this could be an issue. Part of the loan process is getting a current appraisal on your property. The real estate market has been slow, and the homes that have sold are those that had to sell, often distressed properties. These are the comparable properties that will be used to determine your current market value. Your house will need to appraise out in order to get a new loan, so some of the people who could benefit most may not be able to.

These low refinance rates are going to help a lot of people lower their rates, in some cases by a lot. But it will be different this time. With the volume as high as it is, things will take longer and don’t be surprised if some mistakes or mishaps happen along the way. It’s a fact of life that things don’t go quite as smoothly when the volume spikes. You can help our process by getting your documents together quickly, and being available for meeting the appraiser and flexible with times. 

If you would like a loan quote, or if I can help in any way, give me a call or send me an email.

Illinois Mortgage Rates and News                     First time home buyer loans      We Lend in All 50 States

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

A little over a month ago, the Fed started a rally in the mortgage backed securities market (which is linked to mortgage interest rates) by announcing that they are prepared to buy $500 billion dollars of loans in a move to drive mortgage rates lower. Yesterday they followed through on that promise and started to buy these securities. It looks like rates are dropping again.

If you missed the lowest rates we saw last month, you might have another bite at the apple. But the last time rates dropped, the best rates were only there for a matter of hours, and with lender’s web sites crashing under the volume, most people weren’t able to get the best rates. If refinancing your mortgage will lower your rate and help your financial situation, the best thing you can do is to get prepared ahead of time. If you have already gotten your documentation together and your file is in with your loan officer, you are in a much better position to take advantage of the situation.

If you would like a rate quote or if I you would like to see how refinancing would work with your situation, give me a call or send me an email. 

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 January 2^nd 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

Happy New Year! We celebrate New Years because a new year is a new beginning, an end to the old and the start of something new. It usually turns out that the calendar changes, but everything else stays pretty much the same. Leaving a year as tumultuous and ugly as 2008, we have to hope that the new year will bring a real change, but there is a whole lot of carry over from the previous year we have to deal with, first. All agree that we are in a deep recession, and fear is in the air. But there are signs of optimism, too. Later this month a new president and a new administration take power. So much of our economy is based on trust and confidence, and having a new leader inspires confidence. His first order of business is to pass a huge economic stimulus plan, and though the affects won’t be felt immediately, all that money flowing through the system is bound to have an impact over time. Interest rates are near all time lows, and that is good news for anyone looking to buy a home or refinance their mortgage. The stock market feels the optimism, they started the new year with a huge rally, even as more evidence showed the economy is still putting on the brakes. This rally may not last through next week, but it’s a new year and a new start.

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      5.375%    5.486% APR

15 Year fixed Rate     4.875%    5.046% APR

5-1 A.R.M.                 5.125%    5.322% APR

For Jumbo loans over $417,000

30 year fixed rate  * 6.75%      6.827% APR *

Special pricing requires 20% 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%      5.784% APR

With no origination fee – 60 day lock

30 year fixed rate      5.50%      5.739% 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