May 2009

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending May 29nd, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. If you paid attention to the financial news last week, the biggest story was of GM and how it was on the way to bankruptcy next week. But the bigger story this week was under reported in the main stream press, the bond market revolt which sent mortgage rates sharply higher on Wednesday. I wrote last week that volatility is returning to the mortgage rate market. Over the last several months the mortgage backed securities market has taken its cue from the Fed, and with heavy Fed buying of mortgage backed bonds and other debt, mortgage rates have dropped to historic lows and have stayed within a predictable range for the last several months. Last week we felt rumblings,…

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$8,000 First Time Home Buyer Tax Credit Can Now Be Used at Closing – But Not For Minimum Down Payment

Expectations mean a lot. HUD Secretary Shaun Donovan released more details today on the eagerly waited for plan on how first time home buyers will be able to use the $8,000 tax credit, but this is looking like a big disappointment. Donovan made big news a couple of weeks back when he announced (pre-maturely) that FHA would allow the credit to be monetized and turned into a second mortgage so that first time home buyers could use it as part of their down payment. Saving up for the down payment has always been the biggest hurdle to buying a new home. The real estate community (it was first announced in front of a Realtor’s convention) went nuts when this was first announced. If other wise qualified home buyers could use this tax credit as part of their down payment, it would be a big shot in the arm for the…

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The Sky is Falling – Are Low Mortgage Rates Gone For Good?

For the traders in the mortgage backed securities markets yesterday, it had to feel like the sky was falling. Mortgage backed securities lost over 200 ticks  today – a huge and ugly move – and over 300 points in the last week. Mortgage rates move up and down based on what is happening in the mortgage backed securities markets, so when mortgage bonds get blasted like they did today, mortgage rates pop up, too. Rates have risen sharply in the last week, and are now about ¾ of a point higher in rate then they were last week. So what happened to rile the market so much? Is the sky really falling and are the low mortgage rates gone for good? For most of this year mortgage rates have been in a low, low range. There has been some volatility, but most of this year has been stable to the…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending May 22nd, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. Mortgage rate volatility has returned with a vengeance. For the last several months mortgage rates have moved up and down in a range so even it has become predictable. Mortgage rates have gone up and down in this range (sometimes in the same day), and every move has been accompanied by some news which was credited with moving the market in that direction. But over this time the Fed has been a stabilizing influence. They’ve committed $1.25 trillion to buy mortgage backed securities to keep rates low, and so far their plan has worked flawlessly. But this week new fears are in the market and the worry is that it is going to be different this time. Mortgage bonds…

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First Time Home Buyer’s Guide – What You Need to Know Before You Buy

Click for Free– First Time Home Buyer’s Guide I’ve been saying it a lot lately, this is the year of the first time home buyer. The stars have aligned in a way that makes buying a home now more affordable than it has been in years. Not only are home prices the lowest they have been in a long, long time, but mortgage rates are down at levels we haven’t seen since the fifties (when your grandparents were buying their first homes). Combine that with FHA financing where you can still buy with a low down payment (and sometimes no money out of your own pocket) and an $8,000 tax credit when you buy, and this is a great time to be buying your first home. That said, it is also a scary time to buy. The news on the economy is bleak, and the entire mortgage and real estate…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending May 15th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. The data released this week mostly confirms that the economy is still slowing, but not as fast as before. Retail sales numbers were quite a bit worse than expected, though not surprising when you consider how many people who have lost their jobs in the last year. Industrial production numbers were down, but not as much as expected and much better than last month’s figures. The Consumer Sentiment Index went up a touch, showing that people are feeling a little more optimistic about the future. Inflation gauges PPI and CPI (Producer and consumer price indexes) came in a little hotter than expected. CPI base rate was at 0% for the month, showing no inflation, as expected. The core rate…

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Big News for Chicago Area First Time Home Buyers – $8,000 first Time Home Buyer Credit Can Now be Used as Down Payment (Maybe)

Shaun Donovan, the Secretary of Housing and Urban Development (HUD), dropped a bomb shell in a speech to the National Association of Realtors today. HUD, the administrator of FHA will soon allow the $8,000 first time home buyer credit to be “monetized” and used as a down payment on FHA mortgages. I’ve been saying for a while that this is going to be the year of the first time home buyer. With a combination of the lowest home prices in years, historically low mortgage rates, and the $8,000 first time home buyer tax credit, all the stars were aligned for this to be a huge year, and it has started out strong. But this should kick it into overdrive. The biggest obstacle to buying a first home has always been saving up the down payment. FHA allows a 3.5% down payment, and that has been a great way for many…

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How Do You Finance A Condo in Chicago? (Or, Anywhere Else …)

What is Needed for Conventional and FHA condo approval If you are in the market to buy a condo here in the Chicago area, you’ve probably figured out that financing it may be a problem. It used to be that condos were treated like every other property. If you qualified for financing, there were loans available. That’s not necessarily the case now. As a result of the housing downturn and the mortgage mess, financing has become harder to get for all properties, but condos have been hit the hardest. A lot of this is due to condos being too successful. Condos fit the life style that works best for many homeowners, especially singles and couples who want prime living space but don’t want to spend their time mowing the lawn and shoveling snow. Demand for condos was so high, both here in Chicago and throughout the nation, that it led…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending May 8th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. Conventional wisdom is crossing the tipping point and the consensus is that the economy is past the danger point and we have hit the bottom. Much of conventional wisdom is now a step ahead of that and figuring if we are at the bottom now, a quick recovery is on the way. Two big things happened this week which gave weight to that opinion, the results of the stress tests on the 19th biggest banks were released, and the unemployment numbers came in better than expected. As always, the news was a little more nuanced than the headlines showed, but optimism is creeping in. The stress test results came out this week, and the good news was that everyone…

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Green Shoots – Why There May Be an Expiration Date on the Record Low Mortgage Rates

In congressional testimony yesterday, Fed Chairmen Ben Bernanke said that there are signs that the recession is easing and that the economy is likely to start growing again by the end of this year. In other statements he has talked about “green shoots”, signs of life sprouting up through a barren landscape. One of the green shoots he mentioned specifically was that the real estate market is starting to pick up steam. I can attest to that. Here in the Chicago area the purchase market is suddenly active, and for the first time in ages I am seeing multiple contracts, bidding wars, on the same property. Most of the buyers out there are buying a home for the first time, and a good percentage of what they are buying are short sale or foreclosed homes, so this won’t likely translate into a full blown market recovery any time soon. But…

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