February 2009

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending February 27th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. The economic news released this week was consistently grim. The nation’s GDP decreased by 6.2%, housing prices fell to new lows and the Government is now the major stockholder for banking giant Citigroup. But bad news has become the norm now. Market data is consistently coming in worse than expected (and the expectations are low) and when revisions come in they are usually lower still. So bad news doesn’t have the same impact on the markets that it used to because a good deal of gloom is already baked into the expectations. That said, markets crave certainty. They want to be able to take data from today and extrapolate it into the future in the form of prices and…

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FHA Increases Max Loan Limit for Chicago Area Homes

Last year, as a way to increase financing options and help stabilize the housing market, FHA temporarily increased their lending limits. This, combined with conventional guidelines tightening, meant that FHA quickly became one of the best loan options for most borrowers. The temporary limits expired at the end of the year, and new limits were put in place which lowered the FHA limit to $365,700 for a single family home. This was lower than the temporary limits, but well above what FHA had been before. Now, as part of the recently passed stimulus package, FHA is returning loan amounts to the higher temporary limits for the rest of this year. So effective for loans which are credit approved in calendar year 2009, the max FHA loan amount here in the 6 county Chicago metropolitan area (Cook, Dupage, Lake, Kane, Will and Grundy Counties) is now back to $410,000 for a…

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Top 10 Reasons First Time Home Buyers Should NOT Buy a Home Now!

There are a lot of good reasons why a first time home buyer would want to buy a home now – even when the news is so scary and the economy is in a funk – and I have detailed them before in past posts. We all know the reasons to buy – home values are at fire sale prices, low down payment financing is available, interest rates are low and the government is subsidizing your purchase with an $8,000 first time home buyer credit. These are just a few of the reasons it makes sense to buy now. But buying a home isn’t for everyone, and there are some excellent reasons why you shouldn’t buy a home now. If any of these reasons hit your situation, you might be better served by waiting on the sidelines and continuing to rent for now. Here are the top 10 reasons NOT…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending February 20th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. The markets closed this week with a whiff of panic in the air. Over the last several months, the financial markets have dealt with one crisis after another and gotten used to the fact that Government was now the protector of all our economic interests. In spite of the day to day and week to week chatter, as the troubles spread, affecting the entire global economy, we entered a new normal, and stock prices even rose for a while. Stocks this week fell to their lowest point since the economic crisis began, and they are likely to fall further. The trigger for this was a drop in global stock markets after the Davos Economic conference last week, as the…

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The Credit Crunch – Two TV Shows Explain How We Got Here

All the economic news is now focused on the Obama administration and what they can do to stabilize the banking system and the housing market. The news is ugly and there is uncertainty in the air as the government seems to have all its fingers in the dike, doing what it can to avert further disaster. This has gone from what was first described as a sub-prime mortgage problem, to a global recession. If you wonder how we got to the point, two recent TV shows give behind the scenes look at two different parts of the crisis. House of Cards, a CNBC special, details how Wall Street and the mortgage industry came out with riskier and riskier loans as a way to meet the worldwide demand for safe investments. U.S. Real estate was looked at as the safest investment around, and the thought was that prices would continue to…

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First Time Home Buyers – Tax Credit Raised to $8,000

Yesterday President Obama signed into law the $787 billion dollar Recovery and Reinvestment Act – the economic stimulus package. This huge bill is a mix of infrastructure spending and focused tax cuts with the goal to get the money into the economy quickly and fill part of the hole left as a result of the deepening credit crunch. Some of the spending will take a long time to be felt, other parts will have an immediate impact. Here is a link to the White House site showing how all the money will be spent : http://www.recovery.gov/. There is one part of this bill that will affect the real estate market, an alteration of the First Time Home Buyer Tax Credit passed last year. The new bill increases the credit from a maximum of $7,500 to $8,000 and makes it a true credit instead of a no interest loan. This won’t…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending February 13th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. There are 3 main players whose actions move the economy, consumers, business and government. Consumers and business are mostly sitting on the sidelines, so it is up to the government to pull the heavy weight of getting the economy moving again. The biggest news this week was all centered on government action, the passage of a huge stimulus bill, and the unveiling of the outline of a new plan to fix the banking system. The stimulus plan which passed both houses and is expected to be signed into law on Monday, was a good news – bad news situation. Most economists agree that we need something big and we need it quickly. The good news is that this plan…

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Happy Valentines Day – First Time Home Buyers – Renting is Dating, buying a Home is Marriage

(In honor of Valentines Day, here is a repost from last year) It’s all about commitment. If you are a first time home buyer – that is, if you are thinking about becoming a first time home buyer but you are renting now – this is a big step. You probably have some serious commitment issues. Renting is a casual fling. You probably like the place you live in now. Maybe it has a pool and a rec-center that you’ve been meaning to use, but never find the time. Maybe it’s in a great location, close to work and in an area with a good night life. For one reason or another, the place has its charms. It was just what you needed when you first moved in. But now… now, it seems constraining. Maybe even childish. You’ve outgrown it. Not only have you outgrown it, but you have friends…

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First Time Home Buyers – How Much Money do You Need to Buy a New Home?

This is the time of year when the first wave of tax returns have been filed and refunds are in the mail. Saving up that down payment is the biggest road block to buying a new home for most buyers and it is these tax refunds that make up the bulk of their down payment, and put them in the market to buy a new home. But the down payment is only part of the cash you will need to buy. You will also need to account for closing costs and pre-paid charges. The good thing is, there are ways to buy a home, even if you don’t have all the money saved up. So how much will it cost you to purchase a home? (If this seems like a lot, don’t despair. There are ways to minimize the cash you need and we will cover them later). Down payment…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending February 6th 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. In a normal month, the most anticipated report and the number with the most potential to move the markets is the employment report for the previous How a Bill becomes a Law month. The amount of jobs gained or lost in the economy is a good indicator of future economic health. The report is never very accurate. It is impossible to accurately forecast how many jobs are lost or gained each month in an economy as big as ours, and it is almost always revised over the following months. But usually if the report is a little better or a little worse than forecast, this will cause huge tremors in the stock and bond markets. Yesterday the employment numbers…

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