July 2009

How to Use Your First Time Home Buyers Tax Credit for Your Down Payment – The Illinois Home Start Loan Program

Cash strapped first time home buyers in Illinois just got another option for buying a home with almost no money down. IHDA, the Illinois Housing Development Authority, has now released a program which allows qualified first time home buyers to use part of their $8,000 first time home buyer tax credit upfront as part of their down payment on a new home. Coming up with a down payment has been the biggest obstacle for many potential home buyers, and this new program will allow up to $6,000 of the tax credit to be borrowed in advance and used as part of the 3.5% payment needed on an FHA loan. There are some catches and limitations with the program. It isn’t a 0% down loan, the first time home buyer has to have at least 1% of their own funds invested (or $1,000, whichever is higher). There are also minimum credit…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending July 24th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates. Mortgage interest rates are now almost entirely based on what is happening in the stock market. Money moves back and forth based on what investors think will be their best investments at that time, and like a herd on the western plains, the stampede in one direction can change to another direction at a moments notice. When the future looks bright and optimism is in bloom, money flows into the stock market and bonds (including mortgage bonds) suffer. When pessimism rules there is a flight to quality. Stocks dive and the fast money rushes into the safer investments like fixed income securities and mortgage backed securities. So as I’ve said before, bad news is good news for mortgage…

Read More

Your Credit Score Can Cost You Money – What You Can Do to Get the Lowest Payment and Maybe Even Salvage Your Loan

If you are in the market to buy or refinance a home, having a good credit rating is more important now than ever before. Both conventional and FHA loans now use credit based scoring (where better credit scores get better rates) or credit floors (below which your loan is automatically rejected). This means a few points difference in a score can mean a difference of thousands of dollars over the years you hold onto the mortgage, or if you are even able to get the house at all. Credit scores are crucial to the loan process, but the truth is that the whole system is flawed. There are hundreds of factors which go into each credit score and credit scores change constantly. Like taking a snapshot, your credit score measures only what is happening in that moment in time. Some of the scoring items are contradictory and some are entirely…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending July 17th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates. Watching the markets can be like Chicago weather, if you don’t like it now, wait a minute and it will change. Markets are always shifting, but usually within a bigger perspective of what the future holds. Prices can go down in a Bull market, but the lower prices just bring in more buyers looking for bargains. Up drafts in a Bear market allow the smart sellers to unload stock to the suckers who think that the market has really shifted for the positive. The problem of course is that you don’t know what kind of a market you are in until later when the market has either moved up higher or down lower. Over the last 2 years…

Read More

When Should You Panic about Getting Your Home Closed in Time To Get the First Time Home Buyer Credit?

I received a call from the Chicago Tribune the other day asking an excellent question – Is there still a lot of time left for the $8,000 first time home buyer tax  credit? Or to put it another way, is it time to panic yet? The answer is no, it’s not time to panic, and there is still plenty of time for Chicago area first time home buyers to find a home and close on it before the November 30th deadline comes around. But just as summer disappears before we realize it, you can bet that the deadline for the tax credit will be here sooner than you think. This means that some procrastinators will be caught in a squeeze, and there will be a rush to get the last minute closings in under the wire. Real estate deals can take time to come together and close in the best…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending July 9th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. Strike up the band, happy days are here again. Well, maybe not. The economy isn’t improving, in fact the consensus is coming back to the view that the economy is still stagnant. But as I’ve said many a time here, bad news in the economy is good news for mortgage rates. Mortgage rates have nearly come full circle and we are at the outer edges of the low range we were in before the bond market tanked last month with the view that the worst was over for the economy and an impressive rebound was on the horizon. The view is still that we’ve seen the worst of the downturn, but the new reality is that there isn’t going…

Read More

Mortgage Rates Are Dropping – Its Déjà Vu All Over Again

To paraphrase baseball’s greatest philosopher, Yogi Berra, it’s looking like déjà vu all over again. For most of this year mortgage rates have hovered in a range near their lowest levels of the last 40 years. Rates were so low because the economy was in free fall, and the Fed had made it its stated mission to keep mortgage rates low to stabilize the real estate market. After announcing that they would continue to buy mortgage backed securities (with a budget of 1.25 trillion dollars) the normally volatile mortgage rates market settled into a pattern so dull and boring that the rates became predictable. This range lasted for months, but all good things must come to an end, and as June came in the market swooned. Markets are ruled by emotion, and the fear of economic collapse was now gone, but the fear of inflation (from printing new money to…

Read More

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending July 3rd, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. The news released this week continues the trend back toward lower rates, but gave more proof that the economy is bottoming out and the worst of the slide is over. There weren’t a lot of fireworks in the market since so many traders were taking the week off. On the good side, May factory orders ticked up 1.2% and the ISM index, a survey of purchasing managers throughout the country, showed an increase, suggesting more companies are running low on inventories and reordering. The Case Schiller index gave more evidence that housing is forming a bottom. Home prices are still going down, but at a much slower pace than before. On the downside, consumer confidence took a tumble again,…

Read More

New FHA Condo Approval Process Will Mean More Options For Chicago Condo Buyers

With an upcoming change, FHA will be able to finance a lot more condominiums here in the Chicago area and throughout the nation. A recent FHA mortgagee letter detailed the new process that will streamline condo project approval and will open up a lot of properties which up until now have not been eligible for FHA financing. Over the last 2 years condo financing has become increasingly harder with tightening guidelines, restrictive mortgage insurance policies and loan level price adjustments which made condo financing much more expensive for anyone without a big down payment. Over the last 10 years almost all the condos in Chicago were financed with conventional loans and as more and more condo units came on the market through new construction or conversions from rental units, few of these properties applied for FHA project approval. The bright spot for many lower down payment condo buyers was the…

Read More