Welcome to Illinois Mortgage Rates and News week in review for the week ending April 10th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

It’s not every week when the president says that more people should take the opportunity and refinance their mortgages, but that happened this week. So much of the fate of the economy is tied to strengthening the housing sector, and low mortgage rates are a big part of the solution. Because of the low rates we have been in a refinance boom for the last several months, but there have been too many borrowers who aren’t able to refinance because their homes have lost value. President Obama made a presentation to announce the start of his new mortgage program, Home Affordable. This program is designed to help home owners who are otherwise well qualified, refinance up to 105% of the loan’s current value. I will have a full write up on how this plan will work, and who will be most likely to benefit, in the next few days. It won’t help everyone, but it will be a way for a lot more people to lower their rate and lower their mortgage payments.

Mortgage rates this week improved through the beginning of the week and then got worse as the week came to a close. There weren’t a lot of economic reports out this week so mortgage bonds moved up and down based on technical factors and what was happening in the stock market. The movements in the market were magnified because it was a holiday week and many traders were off, so the volume was low. At the beginning of the week the outlook for corporate earnings was low, the stock market got killed and the bond market benefitted, brining rates down. Near the end of the week Wells Fargo, one of the biggest banks, announced record profits, and the conventional wisdom was that the worst of the crisis is over, so the stock market soared and rates popped up again. In a way it’s not surprising that the big banks are able to make record profits. We are in a huge refinance boom and they are borrowing money at 0% interest so the spread is in their favor. I’m not sure that this means the problems are over and we are going to see a return to profitability for most companies any time soon. If the stock market rally sputters again, more money will flow back into bonds.

The Fed continues to buy mortgage backed securities, which is keeping rates in a low range, but rates aren’t going much lower as long as the wholesale lenders continue pricing according to their pipelines, lowering rates when they need more loans, turning off the spigot when they have as much business as they can handle. With the new wave of loans coming from the new Home Affordable program, this is likely to put more pressure on the system and keep their pipelines filled. If you are starting a refinance now and are planning on locking in your rate, make sure to allow plenty of time to get the loan closed. This means at least 45 days (60 days if you want to subordinate a home equity or second mortgage). The other strategy is to float your rate and watch for an opportunity as the rates dip. We have been going back and forth in a range over the last several months. No one knows for sure what will happen to mortgage rates in the future, but so far it has worked well for borrowers who started the process, got their application moving and the appraisal ordered. This way when rates drop down near their low points, they can lock in for a shorter period of time. This puts more risk on the borrower, but it can payoff with lower rates. If you are in the market to purchase a new home in the Chicago area, be sure to allow a little more time, too. Purchases are given priority, but the process is taking a little longer for everyone.

Here is what Illinois Home mortgage rates look like today for an A+ (740 Fico or above), full doc single family home purchase or rate/term refinance on a 45 day rate lock, with 0 points, and no origination fee. The conventional and FHA rates 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%     5.187% APR

15 Year fixed Rate           4.625%     4.724% APR

5-1 A.R.M.                          4.50%        4.701% APR

For Jumbo loans over $417,000

7-1 A.R.M.                         5.125%       5.279% APR

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

FHA LOANS – 3.5% down payment – FHA Maximum varies by County

With 1 point origination fee – 45 day lock

30 year fixed rate            4.75%      5.339% APR

With no origination fee – 45 day lock

30 year fixed rate            5.00%      5.523% 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.

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