Welcome to Illinois Mortgage Rates and News week in review for the week ending September 18th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates.

This week marked the one year anniversary of the fall of Wall Street giant Lehman Brothers, the point where the financial system shifted from crisis into near meltdown mode. After the government declined to rescue Lehman, forcing the company into bankruptcy, the credit markets froze, short term interest rates soared and the stock market was on the verge of a crash. AIG was the next domino to fall, and the government stepped in this time. The mood at the time was bleak, and the possibility of a Great Depression 2.0 was all too real. Since then, the government has gone on a massive spending spree and though the economy is still a mess, a sense of normal has returned. Unemployment is still high and growing, foreclosures are still a real threat, but the stock market is on a tear and all the signs say we’ve passed the worst of the crisis. Fed Chairman Ben Bernanke made it official this week, saying the recession is “very likely over”.

Time will tell if Big Ben has got it right, but all the reports coming out this week do show improvement. Retail sales were up more than expected, industrial production rose and unemployment claims are slightly improved. Inflation numbers came in tame, and the Philly Fed report showed that while the economy is still weak, there are areas that are gaining strength. The real estate market is picking up too, and there is almost a frenzy at the lower price levels as first time home buyers rush to buy and close before December 1^st to take advantage of the $8,000 first time home buyer tax credit. The economy is clearly much improved, but the big issue going forward will be if it can maintain this momentum, and what happens when the government starts to take away all the extra support it has been giving. My guess is that the economy isn’t any where near strong enough to stand on its own, so federal support (everything from extra tax credits, money to buy mortgage bonds and increasing the money supply) will be continuing for quite some time.

FHA confirmed this week that they will fall below the 2% reserve level required by congress. This doesn’t mean that the program is in trouble, as some have said, it is more a result of their vast increase in market share over the last 2 years. FHA loans were nothing but a niche product in the last 8 years, but now make up about 40% of the loans originated. FHA has announced through a series of new mortgagee letters that they will be making a number of major changes in how the program works and to shore up their financing and reduce their risk. I’ll have more on this later, but most of these are common sense proposals that won’t change the over all benefits to FHA home buyers. There are some changes, like the adoption of the HVCC appraisal code, which I hope they reconsider before the policy takes effect next January.

Mortgage rates stayed in the same range this week, a good result considering that most of the economic news was good (bad news is good for mortgage rates) and the stock market continued to rally. The market sold off on Friday, pushing rates slightly higher, but this happened in the absence of any news, and Fridays tend to be the most volatile day for mortgage rates. Mortgage rates are still near the best part of their range, and unless something big happens, I expect rates to continue to go in the same range we have seen over the last month. If you are looking to buy a new home, the first step is a Chicago mortgage pre-approval, give me a call and we can get the process started.

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              5.125%        5.273% APR

15 Year fixed Rate             4.50%         4.674% APR

5-1 A.R.M.                         4.00%        4.173% 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.                        5.125%         5.287% 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.

 

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