Welcome to Illinois Mortgage Rates and News week in review for the week ending August 28th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates.

The end of August is traditionally one of the slowest times of the year in the real estate market. Kids are going back to school, some are taking end of the Summer vacations and for those working, the pace is just a little slower than usual. In the mortgage market purchase business is hotter than usual, but rates are stable, almost exactly the same at the end of this week as they were last week.

The reports released this week were mostly encouraging. Case Schiller housing report shows that home prices are stabilizing. Home prices were up 1.4% on a month to month basis, and though they were still down over 16% from the year before, this was still a big improvement from where it was earlier in the year. The Chicago market is off a little more than the national average, 16.7% for the year. Durable goods orders came in stronger than expected, but most of this was a result of some big orders of Aircraft for Boeing, not a broad increase in economic activity. Consumer confidence bumped higher, too. This measure is closely watched because when consumers feel better about their prospects for the economy, they are more likely to spend, and consumer spending is the engine that drives the economy. Consumers are feeling better short term, but it’s doubtful that this will translate to increased spending any time soon. The survey also said that they were concerned about their jobs and worried about inflation. With household wealth down so much over the last 2 years, consumers are saving at the highest rate in decades, and they aren’t in position to lead the recovery. Next week the monthly unemployment report is released, so expect a more volatile week for mortgage rates next week.

The big news this week was that Fed Chairmen Ben Bernanke was reappointed for another term. His term wasn’t up until January, so the early reappointment sends a message to the markets that continuity is more important than ideology. Most economists credit Bernanke with playing the biggest role in saving the economy from a much deeper recession, and possibly a replay of the great depression. His moves to increase liquidity in the banking system kept the economy from crashing, but the hardest part may lie ahead as he will have to take the liquidity away before the economy heats up too. This will be a balancing act as he needs to act before the economy is fully recovered, and unemployment is still high. If he acts too late we could get hit with a wave of inflation which could be nearly as devastating as what we have been through. This means higher rates some time down the road. Don’t expect this any time soon, though. With foreclosures and unemployment still high, the recovery has to take hold first. Bernanke’s reappointment has to be ratified by the Senate, but that is almost a sure thing.

Bernanke’s unprecedented moves to save the market have led to some unintended consequences. One thing that will have a big impact going forward is that the biggest banks have gotten bigger. The trend over the last 10 years has been for bigger and bigger banks as the few financial giants consolidated their positions by aquiring and merging with competitors. This trend resulted in a handful of banks that were responsible for the majority of financial transactions in the country. Last Fall when the financial system imploded, these banks were at the center of the storm. They were all neck deep in bad mortgage debt and it looked certain that at least one of them would topple. It was quickly determined that these banks were too big to fail, and Bernanke led the move to rescue these banks by flooding them with new capitol. Now, four banks, JP Morgan Chase, Bank of America, Wells Fargo and Citigroup, have increased their market share and are now bigger than they were before. These four banks now are responsible for two thirds of the credit cards and over half of all mortgages issued. This situation hurts competition, and puts the economy at further risk with so much power controlled by so few banks, but once the genie is out of the bottle, how do you stuff it back in?

The real estate market is humming along and I expect that September will be a big month for home purchases. Most of the activity is from first time home buyers, and the big motivations are the lowest home prices in years, low mortgage rates and the $8,000 first time home buyer tax credit. The tax credit is pushing people to act now. The buyers who are in the market now, have a need, but without the credit they may have pushed the home purchase of a little longer. The November 30^th deadline is approaching quickly though, and there is now a sense of urgency that wasn’t there a month ago. There is still plenty of time, but it is less every day. Delays are all too common in any real estate transaction, and you want to make sure you do everything under your control to get your purchase closed on time. For the first step in buying a new home, call me for your Chicago mortgage pre-approval so you are ready and able to meet the deadline.

So how did all this good news affect mortgage rates this week? Here are the current Illinois Home mortgage rates 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              5.25%        5.382% APR

15 Year fixed Rate             4. 625%         4.739% APR

5-1 A.R.M.                         4.25%        4.342% APR

For Jumbo loans over $417,000

***************** SPECIAL JUMBO PRICING ****************

30 Year Fixed Rate*          5.875%        6.093%*

This 30 year fixed Jumbo is special pricing based on a purchase up to 75% LTV or a refinance to 70%, 680 or better Fico scores. Other restrictions may apply.

**************************************************************

7-1 A.R.M.                        5.50%         5.637% APR

(Another option is to break your Jumbo loan into 2 parts – conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)

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

With 1 point origination fee – 45 day lock

30 year fixed rate              5.00%       5.522% APR

With no origination fee – 45 day lock

30 year fixed rate              5.25%      5.529% APR

FHA APR reflects 3.5% down payment and the effect of mortgage insurance on the loan. Call for information on no-cost FHA streamlined Refinances

Call for quotes on FHA 203K Rehab Loans

VA Veterans Administration 0 Down Loans

With 1 point origination fee – 45 day lock

30 Year Fixed Rate            5.00%       5.247%

Call for information on no-cost VA Streamlined Refinances

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

Downers Grove Mortgage Company

We Lend in All 50 States

FHA condo spot approvals have been one of the best things going in the real estate market over the last few years. Most condos have traditionally been financed with conventional loans, but once the financial markets imploded, conventional mortgage options for condos quickly dried up. Mortgage insurance became harder to get and underwriting guidelines tightened so that many other wise strong borrowers, couldn’t meet the new requirements. Conventional condo loans are still available, but FHA financing means a lower down payment, and for most borrowers, a lower interest rate. The only issue was that condos have to be approved by FHA to show that the condo project is financially viable and doesn’t discriminate. With so much conventional financing available when times were good, few developers applied for FHA approval over the last 10 years, so most buildings in the city, and especially the newer, more desirable buildings, weren’t FHA approved. The FHA spot loan filled this gap. FHA spot loans are a way to finance a single unit in a well run condominium without going through the FHA condo approval process. FHA spot loans have become one of the biggest benefits for condo buyers, but that is about to change.

Starting on October 1^st, the FHA spot loan will go away. This is part of a new FHA condo approval process which in the long run will help a lot of home buyers. The new program will allow Direct Endorsement FHA lenders (like my company) to approve the entire building or project when they approve the individual loan. Once a project is approved by one lender, all other FHA approved lenders will be able to use that approval. This new program will also allow buildings with as few as 2 units to be financed through FHA (the minimum is a five unit building now), and by eliminating the ban against first right of refusal language in the decs and by laws (as long as the projects don’t actively discriminate) if will mean a lot more condos will now be eligible for financing. This new process will be a big improvement in the long run, but in the short run, it is going to make it harder to buy and close on a condo, especially for those first time home buyers who want to use the $8,000 tax credit and must close by the end of November.

With the new change, any building that hasn’t been approved by FHA in the last 12 months (from October 2008) will have to be submitted to FHA for a new project approval. So even buildings currently on the approved list will be affected. As part of the new program, in order for an FHA Direct Endorsement Lender to approve the project, they will have to gather more information than what is now required on the spot loans, and it is unclear how to collect some of the required information. The lender is taking on more responsibility and the paperwork and documentation is more extensive. This will put a bigger burden on the lenders to make sure they get everything right, because they will be held responsible by HUD (Department of Housing and Urban Development, the agency behind FHA) for making sure the project fits all the guidelines. HUD will insure that everyone is following the same rules by requiring that each lender submit their first 5 project approvals as test cases to HUD, before they are allowed to approve projects on their own. What does this mean to any buyer looking to buy a condo in a building not approved in the last twelve months? Expect gridlock.

HUD isn’t staffed up to underwrite and approve the volume of loans that are about to come their way. Every FHA Direct lender in the country will be sending out their 5 test cases in early October (those who can will try and have all the test cases on HUD’s desk October 1^st). HUD will go through these files as quickly as they can, and as a project is approved it will be placed in a data base showing that that project is now on the FHA approved list. Once a company has passed all their test cases, they will be able to handle the flow by itself. But no one knows how long it will take to get through the back log, and it could take months to work through all this. HUD won’t be looking at commitment or closing dates on the contract, they will just be trying to get through the flood of applications as fast as their system will allow. So, if you are looking to buy a condo, and time is an issue, be prepared. If you are looking at an FHA spot loan or an FHA approved condo, get your offer in now. Everything changes on October 1^st.

Call me if you want to check on whether a condo is on the approved list now. Here is what is needed to approve a spot loan in the Chicago area:

• The condominium project must be complete, including all common areas and facilities.
• Control of the common areas must have been turned over to the homeowners
• association for at least one year.
• The owners association must provide evidence that the project has the appropriate
• hazard, liability and flood insurance.
• Individual units in the project must be owned fee simple. The project’s legal documents must provide for undivided ownership of common areas by unit owners.
• The project’s documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title is unacceptable. Such restrictions include rights of first refusal and restrictive covenants.
• At least 90% of the units in the project must have been sold.
• At least 51% of the units in the project must be owner occupied.
• No single entity may own more than 10% of the units in a project. The 10% restriction does not apply when the ownership of less than three units would disqualify an otherwise eligible project. The Department recognized that the 10% cap on the number of units that may secure FHA insured mortgages in a given project can place a small regime at a disadvantage, since only a few units will invoke the limit. Accordingly, a two tiered system was established. For condominium projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time.
• Condominium projects consisting of 30 units or less, can have up to 20% of the units encumbered by FHA insured mortgages under the spot loan rule.

This is one in a series of community profiles and a look at how the real estate market is holding up in the community.

Naperville Illinois, a city of 145,000 people located 28 miles west of Chicago in Western Dupage County, is one of the largest cities in Illinois. Naperville has consistently been named by national magazines as one of the best places to live and a great place to raise a family. Naperville’s school system is recognized for it’s quality nationwide, and most of the students from its 4 high schools go on to college (the ACT ranking is among the best in the state). Unlike most of the nearby suburbs, Naperville is a destination on its own. It anchors the I-88 high tech corridor, and is home to several Fortune 500 companies and the most lively down town shopping and entertainment district outside of Chicago. The Naperville Settlement, a living history museum, and the Naperville Riverwalk add character to the downtown. Big draws during the summer are the Rib Fest and Last Fling festivals, which attract thousands and feature national touring musical acts.

The Naperville real estate market is big enough and diverse enough that it covers every price point from starter condos up through multi million dollar estates. The city covers over 35 square miles in both Dupage and Will County, and is made up of a vast collection of interconnected subdivisions. The average listing price for homes currently listed is over $500,000, and the average sale price in July 2009 was $330,000 – down about 8% from the year before. Most of the sales activity is in the lower to mid-priced range. Over the last few years most of the new construction was in the higher ranges, and the inventory of million dollar plus homes will take years to sell based on the current sales volume.

Naperville mortgage financing has traditionally been made up of mostly conventional and some jumbo mortgages. Home prices have come down nearly everywhere, and Naperville is no exception. With the FHA loan limit now increased to $410,000, Naperville mortgage rates are made up mostly of a combination of conventional mortgage loans and Naperville FHA loans. Naperville is still a relocation destination, and while the premium end of the market has been less active, Naperville Jumbo Loans are readily available. Naperville home loans are well priced, and as a Naperville area mortgage lender, I can help you find the financing package that is best for you.

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Welcome to Illinois Mortgage Rates and News week in review for the week ending August 21st, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates.

All summer long the mortgage market has been range bound. The pattern has been two steps forward, one step back, then one step forward, two steps back. That’s the mortgage rate shuffle. This week rates improved over most of the week before getting slaughtered on Friday. That is one of the key elements of the mortgage rate shuffle, the direction changes on Friday. What this means to you as a consumer, is that the news effects mortgage rates on a day to day basis, but right now the bigger picture is that mortgage rates are more influenced by the price levels of Mortgage Backed Securities, and the traders are watching the range and selling as prices get high, and buying when they reach the cheaper end of the range. At some point something will happen, and rates will break out of this range, but for now, if you are in the market for a mortgage, there is a time to lock and a time to float. Even with the sell off on Friday, mortgage rates are near the best part of the range. This could be a great time to lock in your rate.

One of the biggest news items this week was the greater than expected increase in home sales. With home prices down, low mortgage rates and the $8,000 first time home buyer’s tax credit, the real estate market has come back to life. Existing home sales rose 7.2% nationwide in July from the month before, and actually increased 5% on a year over year basis. This is great news, and the coverage of this release showed this as evidence that the real estate market had hit bottom and was now rebounding. I think this is an excellent time to buy, especially for those who can take advantage of the tax credit, but the news isn’t all sunny. The median sales price in the Chicago area was down 16% from last year for a median price of $213,000. This reflects two things. One, prices have fallen and a big part of this is because foreclosure and short sale properties are the biggest part of the market now. The NAR says that 31% of the sales last month were distressed, other sources show the percentage as much higher. The second thing this figure shows is that most of the activity is in the lower price ranges. The tax credit counts for part of this, but with so many of the homes sold being distressed, this means no move up buyers rather than the chain of transactions that are set off in a more traditional real estate market. These sales do help reduce inventory, which is necessary for any kind of true rebound, but inventory of homes for sale is still around 11 months, and with unemployment high foreclosures and short sales will continue to grow. Buying now makes sense and bargains abound, but you need to plan on staying in the home long term, because the market isn’t going to shift overnight.

Fed Chairman Bernanke also made news on Friday when he said that we have survived the worst of the down turn and prospects for growth are good. He said that the Fed’s response to the financial crisis last year (pulling out all stops to get more money and credit moving in the system) “saved the world” (I agree with him on that point) and that we are now on that we are now on the verge of recovery. The stock market surged again on these words, down playing the rest of the message, that credit is still tight and difficult times lie ahead. Stock prices are now at their highest point over the last year. Oil prices also hit their high for the year Friday, closing at just under $74 per barrel. This looks a lot like Déjà Vu to me. Last year we saw a huge run up in oil prices, up to $140 per barrel, which crested at the end of the summer and then fell like a stone. At the time, inflation was the big concern and there was talk that oil would hit $200 be fore the year was up. Even with signs of recovery the demand for oil is way off, so oil isn’t spiking because of the fundamentals, it is a reflection of softness in the dollar. If stock prices fall that would help mortgage rates fall lower.

In spite of the sell off on Friday, mortgage rates ended the week almost the same as they ended last week, and still near the best parts of our range. Time is a real factor if you are a first time home buyer counting on the $8,000 tax credit. We are now just 3 months out from the deadline of November 30^th, which is still plenty of time, but less time than you think. Unexpected delays are all too common in any real estate transaction, and you want to make sure you do everything under your control to get your purchase closed on time. If you are still not sure where to start, call me for your Chicago mortgage pre-approval so you are ready and able to meet the deadline.

So how did all this good news affect mortgage rates this week? Here are the current Illinois Home mortgage rates 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              5.25%        5.382% APR

15 Year fixed Rate             4. 625%         4.739% APR

5-1 A.R.M.                         4.125%        4.342% APR

For Jumbo loans over $417,000

***************** SPECIAL JUMBO PRICING ****************

30 Year Fixed Rate*          5.875%        6.093%*

This 30 year fixed Jumbo is special pricing based on a purchase up to 75% LTV or a refinance to 70%, 680 or better Fico scores. Other restrictions may apply.

**************************************************************

7-1 A.R.M.                        5.50%         5.637% APR

(Another option is to break your Jumbo loan into 2 parts – conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)

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

With 1 point origination fee – 45 day lock

30 year fixed rate              5.00%       5.522% APR

With no origination fee – 45 day lock

30 year fixed rate              5.375%      5.529% APR

FHA APR reflects 3.5% down payment and the effect of mortgage insurance on the loan. Call for information on no-cost FHA streamlined Refinances

VA Veterans Administration 0 Down Loans

With 1 point origination fee – 45 day lock

30 Year Fixed Rate            5.125%      5.327%  

Call for information on no-cost VA Streamlined Refinances

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  

Downers Grove Mortgage Company

We Lend in All 50 States

This is one in a series of community profiles and a look at how the real estate market is holding up in the community.

Elmhurst Illinois is a city of about 45,000 people located at the Eastern border of Dupage county, in Chicago’s western suburbs. Elmhurst prides itself as the Tree Town, and is home to Elmhurst College and Elmhurst Memorial Hospital and  the Lizzardo Museum of Lapidary Arts. Elmhurst is an affluent area with a median household income of over $100,000 and an average home price of over $400,000. Elmhurst is more of a bedroom community than an employment center, and most of it’s residents work in Chicago or in other suburbs. There is a thriving downtown, and restaurants range from fast food to white linen fine dining.

The Elmhurst real estate market ranges from some condos and starter homes, to homes priced well over the one million dollar range. The median priced home in July 2009 was $310,000. The average listing price is over $500,000, which shows that most of the sales activity is in the lower end of the market. Home prices have decreased by about 11% from last year, and the number of homes sold has decreased by about 38% from last year.

Elmhurst mortgage financing has traditionally been made up of conventional and jumbo mortgages. This has changed over the last two years as home prices have come down and the FHA loan limit has been increased to $410,000. Now Elmhurst mortgage rates are made up of a combination of conventional mortgage loans and Elmhurst FHA loans. There are still a lot of homes priced in the upper ranges, but with a lack of financing for Elmhurst jumbo mortgage loans, there hasn’t been much turnover in the higher priced homes. Elmhurst home loans are readily available, and as an Elmhurst area mortgage lender, I can help you find the financing package that is best for you.

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About a month ago, I wrote that it was too early to panic if you were a first time home buyer and counting on the $8,000 first time home buyer tax credit. Home sales have been inching up each month, and a big part of the increase is due to first time home buyers. The $8,000 tax credit is a big incentive, and predictions call for a surge in first time home purchases as the November deadline approaches. But it takes more time than most people realize to find and finance a home, and too much of the process is outside of the buyers control. Too many things can happen to delay a closing, or worse, kill the deal. If you are one of those people who wait until the last minute to get things done (I know I’m guilty of that), this isn’t like pulling an all-nighter to get your term paper done the day before it’s due. There are a host of parties involved in any real estate transaction, and you are at their mercy when it comes to timing. So is it time to panic yet? The answer is still no, but the clock is ticking and that time is approaching faster than you might think.

Here are some things which may add extra time to your purchase:

Are you looking at short sales or foreclosures? Some of the best bargains on the market now are short sales and foreclosures. These distressed transactions now make up about 40% of the sales here in the Chicago area. These can be great bargains, but don’t expect the deal to come together quickly. With a short sale you need to not only get the seller to agree, but also the bank that holds the mortgage. Some of the banks are now responding quickly, but it’s not uncommon to put in an offer and wait for a month or longer (sometimes much longer) before the bank makes a decision. If short sales and foreclosures are on your list to look at, you don’t have a lot of time to waste.

Are you looking for the right home, or just any old home? When you have more time to look, you can afford to be picky. When a deadline fast approaching, too many buyers are going to settle on the first home that is acceptable and not the home that is right for them. Avoiding the last minute rush gives you more control.

Do you have problems you don’t know about? – One of the major factors in your loan approval is your FICO score. All loans, both conventional and FHA, now have established minimum scores for approval, and pricing is based on how high your scores are. One of the things I see on almost a daily basis is people who are surprised about what comes up on their credit report. This could be a matter of incorrect or outdated information, or it could be a real issue which you need to address. Either way, if we have time we have a better chance of fixing the problem then if you don’t find out about it until the last minute. This is one of the main reasons it makes sense to get pre-approved for a mortgage before you even start looking for a home.

Everything will take longer as we get closer to the deadline – Once you have your contract together, getting the mortgage done on time is the major hurdle. Right now we are processing loans and closing quickly, but a few months back when the system was overloaded with refinances, everything took a lot longer. As purchases pick up over the next few months, we expect a back log as we get closer to the date. And if rates drop again, and refinances pick up again, this will cause more of a back log. We, like many companies, have ramped up our staff and are ready for the higher volume, but I still hear about many mortgage companies who are taking 60 days or longer to get a loan to closing. When you are ready to close, make sure you ask your loan officer if they can get the loan done on time, and if they can guarantee that you will hit the dates in the contract.

What is the properties condition? It’s becoming more and more common to see homes that need repairs before they can close, especially with the foreclosures. Sometimes these are small things, and a lot of buyers are getting access before the close and making the repairs themselves (the banks usually won’t). But often the repairs are too extensive and cost too much. For these situations an FHA 203K loan is a great solution, but this will take more time to put together and close. I’ll write more about the 203K loan soon, but if you are looking at this as a possibility, you should get moving soon.

Are there any issues with the title? Another issue that you may not even know about until close to the closing is if there are any title issues. The title is usually pulled by the sellers attorney, and it gives a history of the property’s ownership, and shows if any liens are outstanding. If something shows up on the title, this will need to be cleared up before you are able to close. If you are near the deadline, this could be enough to push you over, losing out on the $8,000 tax credit.

There are some other new wrinkles to the mortgage process which will also add to the time required for the mortgage and the closing. The new HVCC appraisal requirements means that the appraisers aren’t as service oriented as they were before, and as volume picks up it will take longer to get an appraisal back. There are also new Truth in Lending rules which just went into effect, and if the APR on a loan changes by 1/8 of a point, either up or down, the Truth in Lending will need to be re-disclosed and there is a mandatory delay of the closing. There is a whole list of items which affect the APR including not only bank fees, but title charges and tax stamps, so until the industry gets this one down there is a potential for delay.

The bottom line is that it’s not time to panic yet, but you may have less time than you think. If you want to make sure you do everything in your control to close on time (and allow for those items out of your control) you should start soon.

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Illinois Mortgage Rates                   First time home buyer loans  

Downers Grove Mortgage Company

We Lend in All 50 States

Welcome to Illinois Mortgage Rates and News week in review for the week ending August 14th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates.

What a difference a week can make. Last week signs of a rebound in the economy were everywhere. The conventional wisdom was that the economy was not only over the worst of the down turn, but on the cusp of a strong upswing. This week the message was slow down, we might not be done with this mess yet. In a week with lots of data, a Fed meeting and 3 treasury auctions bringing about $75 billion of new bonds on the market (which is generally bad for mortgage rates) the mortgage market rallied and mortgage rates dropped sharply. Over the last several months, since May when rates jumped out of their all time low range, mortgage rates have moved up and down in a broad pattern. We are now approaching the best part of that range. If recent history is a guide, this coming week will be a good time to lock in a loan if you are in the market for financing.

As usual, the economic reports were somewhat mixed. The Reuters/ University of Michigan Consumer Confidence survey came in low again for the second month in a row. Consumer spending has traditionally been the biggest engine of growth in the economy. If consumer confidence is low, this means consumers aren’t in a position to spend us out of this recession. Retail sales also came in much worse than expected. Total sales dropped by .1% for the month, but this was at the same time that the Cash for Clunkers program was goosing auto sales through the roof. Analysts expected an increase of .8% for the month, but sales of everything but autos was so low that we saw a slight decrease instead. The weekly labor report was weak again, but on the good side, productivity came in strong. Though part of this was a result of businesses cutting employment to the bone and getting by on less. Better news was that there are still no signs of inflation. The consumer Price Index came in flat, and prices have fallen over 2% from last year.

The Fed Open Market Committee met on Tuesday and Wednesday and issued their statement of policy at the close of the meeting. Fed statements are always dissected for hidden meanings and hints at future policy. This statement was no exception, and the take away for most reporters was the phrase “economic activity is leveling out. Conditions in financial markets have improved further in recent weeks.” This is obviously much better than it has been, but the rest of the statement doesn’t hint that they expect a fast recovery. The best news from a mortgage standpoint is the phrase “the Committee expects that inflation will remain subdued for some time.” Mortgage rates react to the threat of inflation, so this expectation should keep a lid on mortgage interest rates for an extended time.

The Treasury auctions also went well this week. With the big increases in government spending, these auctions are becoming a standard occurrence. One good sign this week was the high amount of foreign buyers at the auctions. If the rest of the world still wants to buy our debt, we are still in good shape for the future. The stock market is another major factor in mortgage rate volatility. With optimism on the economy strong, stocks have been flying. But stocks faltered this week, and if this consensus continues to change, and investors start focusing on how long the recovery will take and how robust it will be rather than how much better we are now than we were last October (is the glass half empty instead of half full), money will flow out of stocks and bonds will benefit. This could mean lower mortgage rates if stocks do drop.

In the real estate market, August is usually one of the slowest months of the year. We are in the dog days of summer, and this is the time when people are taking last minute vacations, getting their kids ready for school and just enjoying the end of summer, because it is too hot to go around looking at houses. But this august is different. First time home buyers are out in force, making offers and getting pre-approved for a mortgage, so they have time to buy and close on a home before the November 30^th deadline of the $8,000 first time home buyer’s tax credit. It isn’t too late to start, but November will be here sooner than we think. It takes time to find a home, process and close a loan, and I expect a flood of new applications as we get closer to the date. Make sure you get your Chicago mortgage pre-approval so you are ready and able to meet the deadline.

So how did all this good news affect mortgage rates this week? Here are the current Illinois Home mortgage rates 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              5.25%        5.382% APR

15 Year fixed Rate             4. 75%         4.883% APR

5-1 A.R.M.                         4.125%        4.342% APR

For Jumbo loans over $417,000

***************** SPECIAL JUMBO PRICING ****************

30 Year Fixed Rate*          5.875%        6.093%*

This 30 year fixed Jumbo is special pricing based on a purchase up to 75% LTV or a refinance to 70%, 680 or better Fico scores. Other restrictions may apply.

**************************************************************

7-1 A.R.M.                        5.50%         5.637% APR

(Another option is to break your Jumbo loan into 2 parts – conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)

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

With 1 point origination fee – 45 day lock

30 year fixed rate              5.00%       5.522% APR

With no origination fee – 45 day lock

30 year fixed rate              5.375%      5.529% APR

FHA APR reflects 3.5% down payment and the effect of mortgage insurance on the loan. Call for information on no-cost FHA streamlined Refinances

VA Veterans Administration 0 Down Loans

With 1 point origination fee – 45 day lock

30 Year Fixed Rate            5.125%      5.327%  

Call for information on no-cost VA Streamlined Refinances

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  

Downers Grove Mortgage Company

We Lend in All 50 States

One of the favorite parlor games for economists and financial analysts is reading the Fed statements and interpreting what the language really means. Like Sovietologists back in the Cold War, these analysts look for the meaning between the lines. Maybe it is how a word is substituted from the way the statement was worded the previous month, or something that is missing from the statement, but each little clue has a meaning. The markets rely on these interpretations, because by themselves, the statements could lead to any of several competing policies. The markets are looking for evidence of how the Fed will move forward and whether their biggest goal will be to fight inflation by tightening the money supply, or to try and grow the economy with a loose money policy.

Interest rates have been set at 0 all year, and no one expected that would change and most of the statement restated what has been said in previous statements. The biggest change was the announcement that the Fed would discontinue it’s quantitative easing program of buying up Treasury securities by October, but that was widely anticipated and not a surprise. Some wording pointed to the economy recovering – “economic activity is leveling out” “financial markets have improved”. Other phrases emphasized the risk to the down side – “ongoing job losses, sluggish income growth, lower housing wealth, and tight credit”. The telling phrase may be a carry over from past statements – “the Committee expects that inflation will remain subdued for some time.”

In the end, reading the Fed statement is like looking at a Rorschach test. What you see in it depends on what you are looking for. The mortgage bond market (which is the basis for mortgage interest rates) went for a wild ride today, getting worse when the statement was first announced, but ending the day almost the same as where it started, keeping mortgage rates about the same.

Here is the statement in full:

Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by “. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Illinois Mortgage Rates                   First time home buyer loans

Elmhurst Mortgage Company, We Lend in All 50 States

Welcome to Illinois Mortgage Rates and News week in review for the week ending August 7th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates.

Mortgage rates jumped again this week as more good news on the economy was released. The stock market is the highest it’s been since last October, and I’m wondering, was it really this easy? Less than a year ago the entire world financial system was on the brink of collapse. A new great depression was discussed as a real possibility and fear was so thick you could smell it. The government went on an unprecedented and massive spending spree, borrowing trillions to prop up our banks, pump cash into the system and stimulate the economy in an effort to avert a complete crash. The crash was avoided, but unemployment has surged and foreclosures are now commonplace in the best of neighborhoods. Over the past months as the threat of a worst case collapse lessened, the conventional wisdom was still that unemployment would continue to rise and any recovery would be slow and painful. But the news coming out now is so much better than expected. Was it really this easy?

There was a lot of data released this week, and while it was some what mixed, with rose colored glasses firmly in place, optimism on the economy ruled in the markets. Core inflation decreased this month, home sales were up for the fifth straight month and the ISM services index came in worse than expected, showing more expected weakness in the economy. But the Big Kahuna of economic indicators is always the monthly jobs report. Expectations were for job losses of around 340,000 in July, bad, but much better than the 600,000 plus we were seeing each month earlier in the year. The number came in much better at 247,000 jobs lost, and as a kicker, the unemployment rate dropped a tick to 9.4%.

The reaction to this news all plays into expectations. The jobs report if looked at on its own is still pretty bleak; it takes over 100,000 new jobs created each month to keep up with new people entering the work force. But this report was so much better than before, and employment is considered a lagging indicator (the recession is usually over before employment improves) so it is grounds for optimism. Right now, the markets are expecting a V shaped recovery. This means that a graph of the economy will look like a V with the economy recovering as quickly as it dropped. This is the market opinion now, but as you know, markets can be fickle. Most economists are still saying that other outcomes are more likely.

Some are looking at the worst case and saying that with our increased savings rate and decreased individual wealth, the economy has stopped its big drop, but there won’t be much of an increase any time soon. This scenario is a replay of what happened to Japan in the 90s, an L shaped economy where we would spend years bumping along the bottom. A U shaped recovery is a greater possibility. This means that we will bump along the bottom for a while, but over time we will move back up in a gradual recovery. Another likely bet is a W shaped recovery. If a V is forming now, this could be a set up for another drop later on. Government spending is still the only driver in the economy. Credit is still tight and consumers and businesses are not in a position to lead. Part of the upswing will be a result of inventory replenishment. When the big drop came at the end of last year, all businesses cut to the bone. Retailers stopped buying and manufacturers stopped making products. As inventory runs out, there will be an improvement in the economy based on reorders of the inventory, but if demand doesn’t increase quickly, this could quickly turn to another down turn. It will take some time to see which scenario plays out, but if you are following mortgage rates, volatility is super high, and this is a time to be cautious and lock your rate at the application.

In other mortgage related news, Taylor Bean & Whitaker, a wholesale lender that was one of the biggest sources for FHA loans for many smaller brokers, was cut off from FHA earlier this week, and officially went out of business the next day. That is bad news for any of the thousands of borrowers who had loans in the pipeline, whether directly from them or through one of the brokers who placed their loans with Taylor Bean. These borrowers will now have to start the process over, with their current lender or a new one, and the rates they locked in are gone. It has been quiet on the mortgage implosion front for quite a while, and this is a reminder that you need to know who you are dealing with, and some lenders are still very fragile. Fannie Mae also announced that they are running out of money and will need another government infusion soon. If you are a first time home buyer, remember, the $8,000 first time home buyer’s tax credit is only good through a close date of November 30^th . If you want to make it in time, you should get moving soon. Make sure you get your Chicago mortgage pre-approval so you are ready and able to meet the deadline.

So how did all this good news affect mortgage rates this week? Here are the current Illinois Home mortgage rates 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              5.50%        5.678% APR

15 Year fixed Rate             4.875%        5.064% APR

5-1 A.R.M.                         4.375%        4.522% APR

 

For Jumbo loans over $417,000

30 Year Fixed Rate*          6.875%        7.093%

7-1 A.R.M.                        5.625%        5.729% APR

(Another option is to break your Jumbo loan into 2 parts – conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)

 

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

With 1 point origination fee – 45 day lock

30 year fixed rate              5.3755%      5.742% APR

With no origination fee – 45 day lock

30 year fixed rate              5.625%      5.739% APR

FHA APR reflects 3.5% down payment and the effect of mortgage insurance on the loan. Call for information on no-cost FHA streamlined Refinances

 

VA Veterans Administration 0 Down Loans

With 1 point origination fee – 45 day lock

30 Year Fixed Rate            5.50%      5.748%  

Call for information on no-cost VA Streamlined Refinances

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  

Downers Grove Mortgage Company

 We Lend in All 50 States

Some of life’s decisions are more momentous than others. Where you go to school, who you marry, what career you will pursue or where you buy your first home, these decisions are biggies, and they will shape what happens in your life going forward. Who you work with to get a mortgage? Not so much. Using a bad mortgage lender won’t change your life. But it will make for a miserable experience while you are going through it. A lot of people look at a mortgage as a commodity, especially now when the entire market is made up of fixed rate conventional or FHA loans. The truth is, who you choose, both from a company and individual standpoint, will make a big difference in the price you pay and how satisfied you are with your experience. If you are in the market to buy a home, it pays to do more than shop for the best rate and fees. You also need to know who can best help you with your situation.

I’m not saying that rates and fees aren’t important. They are, and you should ask for a written Good Faith estimate from any lender you consider using. But rates and fees are only one piece of the puzzle. You need to ask some questions and do some research about both the company who will make the loan, and the loan officer who will work with you to make sure you are getting the right fit for you and your situation.

Here are some things to consider when choosing what mortgage lender, and what loan officer you want to deal with:

The mortgage lender:

What kind of company is it? – There are several different types of lenders – banks or direct lenders, mortgage brokers and mortgage bankers. Each one makes mortgage loans, but they each do it in different ways. Mortgage brokers usually have a number of options on where they will place the loan which may help with the pricing, but they have the least control over the loan process. Banks and direct lenders usually have only one source for the loan, themselves. This means that if they are looking for more business they may be aggressive with their pricing, but once their pipelines fill up the pricing may quickly get uncompetitive. Banks and direct lenders usually control the process, but they often do everything from remote processing locations so the loan officer has little contact with the loan once it leaves his hands. Mortgage bankers are hybrids between the two, and they often have multiple sources of lending, like brokers, but retain most of the control, like bankers.

Who will order the appraisal and what happens if you need to switch lenders? This is a question that has only recently become an issue, since the adoption of the HVCC appraisal guidelines. With these new guidelines the loan officer has no direct contact with the appraiser as a way to make sure that the loan officer doesn’t pressure the appraiser into giving higher values for the properties. The problem comes with the details of the guidelines. In many cases it is the end lender who the loan will be locked in with who orders the appraisal. This not only means less control, but if you are denied with that lender or decide to switch lenders for some reason (like when rates drop), you will need to start all over again with a new appraisal from the new lender. This isn’t the case with all lenders, but it is something you should check on and a question to be asked at the beginning of the process.

How long will it take to approve the loan? The mortgage business has slowed down over the last few months as the refinance boom died down. But right now there are some companies that can close loans quickly, and others that still need a minimum of 60 days and sometimes 90 days before they will be able to close. A lot of this comes down to control. Do they do their processing and underwriting in house? Or do they ship the loan off for these loan functions? What are their underwriting turn times? Who puts together the closing documents? Will they be able to meet the contract contingency date and the close date? These are all questions you should ask up front, so you aren’t surprised down the road.

Is the lender set up to do the loan that is best for you? Not every lender has the same inventory of loan options. For example, FHA the best loan available for most first time home buyers, was not a real factor in the market until the last 2 years. It now accounts for almost half of the loans taken on. Does the lender offer FHA or will they try and steer you into another option, or say you need a much larger down payment to buy? If they can do FHA, will they broker out the loan or are they a direct endorsement FHA lender? The same goes with other programs. Check to make sure that the lender has the program you need and is able to work it for your benefit.

What is the company’s reputation? Ask your Realtor or a real estate attorney what they know of the company. Do a Google search and see what comes up.

The loan officer

Choosing the right company is critical, but it is the loan officer who will be your day to day contact. A good loan officer can make a world of difference, while a bad will make your experience a case study in frustration. The loan officer’s job is to bring in good loans for the company. The loan officer is like a concierge and a guide. Their job is to qualify you for the mortgage, find the program that works best for you, make sure that your situation fits within the guidelines of the program, get the initial approval, and gather all the documentation needed. The loan officer works with a team on the inside, but he may be your only contact throughout the loan process.

Here are some things to ask any loan officer you are considering:

How long have you been in the mortgage business? There are good new and even rookie loan officers, but as a rule, experience is a plus. Most situations will fit within the lending guidelines, but there are always wrinkles, in a situation or a property, which can cause problems. If someone has worked with a similar situation before, they may be able to smooth out the wrinkle early in the process before it becomes a real problem.

Does the loan officer work with the type of loan that is best for you? Again, using FHA as the example, if this is the best program for your needs (and it is for most first time home buyers) you want to work with someone who knows the ins and outs of the program.

How well does your loan officer communicate with you? This is a little thing, but one that can make a big difference. Does he return your phone calls in a timely manner? Does he communicate the way that works best for you (phone, email, whatever)? If you have questions, does he get back to you with an answer? If there is a problem, does he tell you about it, or just stop taking your calls? If you aren’t communicating on the same level, expect a frustrating experience.

Have you built a rapport with the loan officer? Going from pre-approval to finding a home and closing on it normally takes at least a few months. During this time you will be relying on your loan officer to give you the best advice throughout the transaction. Do you trust and few comfortable with him? Does the advice make sense to you? Does he understand your situation and your future goals, or is it just a matter of quoting rates? If there is a problem, do you think he will go to bat for you, or take the easy way out?

Buying a new home can be a great experience, but make sure you do your home work first. Picking the right company and the right loan officer will reduce your stress and give you a much better chance of getting to a smooth closing on time.

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Illinois Mortgage Rates                   First time home buyer loans  

We Lend in All 50 States