June 2010

Chicago Illinois Current Mortgage Rates and Weekly Update for the Week of 06/25/2010

While day to day volatility remains high, mortgage rates remain near their all time lows. The economic data is still mixed, but it looks like the recovery is losing steam, and the fear is that the economy may dip back into a new recession, or continue a long slow slog of bumping along the bottom, without a real upturn into growth.  Existing home sales fell 2.2% in May. The inventory of unsold homes on the market is sitting at an 8.3-month supply at the current sales pace, slightly better than the 8.4-month supply in April. New home sales fell 32.7% – the slowest sales pace since they began keeping records back in 1963. New home sales have fallen 78% from their peak in July 2005. Durable goods orders fell 1.1% in May after increasing a revised 3% in April. Initial claims for unemployment benefits fell by 19,000 to 457,000 for…

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Mortgage Rates Will Continue to Stay Low – Fed Statement Shows Rates Will Stay Low For an Extended Period of Time

It’s Fed time again, and as expected, the Fed will keep short term rates at the same 0 –.25% range. The Fed minutes are always much anticipated and analysts try to read between the lines to see if there are any hidden meanings which would telegraph the Fed’s likelihood or timing of their raising rates sometime in the future. You don’t have to be a psychic or Fed expert to read their true meaning now, rates are low and they will stay low for a long time. This version was a little bleaker than previous, versions. High unemployment, lower housing wealth and tight credit are keeping a cap on growth, the statement said, and alluding to the European financial crisis, financial conditions have worsened. All the Fed watchers are looking for signs of inflation, and the view here is that inflation is in the far distance, and not a threat…

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Chicago Illinois Current Mortgage Rates for Today, 06/22/2010

Mortgage rates are hitting record lows again. Yesterday after China announced that it was considering decoupling the Yuan from the dollar, it looked like the streak of low rates was about to turn. But this was only a head fake higher before rates resumed their march lower. The market decided that China’s move was more symbolic than anything, and that this might not be the major event it first appeared to be. Today existing home sales fell by 2.2%, worse than expected, and the stock market sold off again. The result is that mortgage rates are the lowest they have been in ages. This means that for those who qualify, refinancing is a hot bet. If you are buying a new home,this is an opportunity to lock in your loan at a rate that will make your parents jealous. The big question now is how long these low rates will…

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FHA Changes Coming Again? FHA Mortgage Insurance is Likely to Go Up

FHA may be about to change again. In a vote of 406-4, the House of Representatives passed a bill that, if passed by the Senate, will increase the monthly mortgage insurance for FHA loans. Over the last 2 years FHA has gone from being a bit player in the housing market, to the main choice for most first time home buyers, and now makes up about 40% of the overall loan volume. Because FHA has increased market share so quickly, and as a result of all the stress in the housing market, loan defaults have become a real problem. Some critics of the program have said that the higher default rate is a result of FHA making bad loans. The truth is more complicated. FHA, though it is a government program, has been self sufficient since it started, and uses the mortgage insurance premium that it charges to cover any…

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Chicago Illinois Current Mortgage Rates Week in Review for the Week Ending 06/11/2010

Volatility in the markets is high again, but mortgage rates ended the week in the lowest range of the last year, at record low rates. Mortgage bonds were strong most of the week, but when the stock market staged a rally on Thursday, volatility hit hard and as bonds dropped, mortgage rates got hit hard. But the trend was back on track by Friday as low retail sales numbers came in much lower than expected, casting doubt on the strength of the recovery. Some of the other reports released were a little more mixed, but mortgage rates aren’t really moving based on economic reports now. The big mover in the interest rate market is the stock market. Stocks are at a crucial point now, and the question is whether the rally is pausing before making the next leg higher, or if the problems in Europe are an indicator of more…

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Seller Closing Cost Credits – How to Save Money and make the Best Use of the Cash You Have With Seller Credits

When I talk with prospective home buyers, one of the biggest surprises is how much it cost to buy a home. Most buyers expect that they will need to come up with a down payment, and with FHA requiring a minimum of 3.5% down (and that can come from a gift), but it is often a shock that there are additional charges they will need to come up with at closing, and in order to even qualify for the mortgage we will need to see that they have the ability to come up with the cash needed to close. Besides the down payment, some of the items you will need to pay for include: Bank fees, including the appraisal and credit report, underwriting and processing charges. Title charges. Transfer taxes. In Chicago the transfer tax is .75% for buyers, or $2,250 on a $300,000 home, so this can be a…

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Chicago Illinois Current Mortgage Rates for Today 06/04/2010

After a bad unemployment report, and more trouble out of Europe, mortgage rates are improving. The unemployment numbers while positive on the face, were ugly once you looked at the details. The overall gain was almost all a result of temporary census hiring, and the jobs gained was much lower than expected. Ad  to this more rumblings from Europe, Hungary this time, and the result is a bad day for stocks and a big day for bonds. Confidence in the strength of the recovery is now fading, and the odds of inflation being a threat any time soon, is now close to 0. So mortgage rates are near the best rates we’ve seen over the last year. Mortgage rates are great, but money is still tight. There are a lot of home owners who would greatly benefit from a refinance, but aren’t able to take advantage of it due to…

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Mortgage Rates Improving on Weak Unemployment Report

The BLS jobs report this morning shows an increase of 431,000 jobs, but 411,000 of those jobs are temporary, government paid census workers, so the real increase is only 20,000 jobs for the month. The unemployment rate, which is figured through a different system, ticked down to 9.7%. In the mortgage world, the monthly unemployment report is always the report which is most anticipated and has the most influence on mortgage rates. Employment is the base of the economy, and when employment is strong more people feel good about their prospects, and are willing to spend money. When employment is weak people tend to pull back, and even if they have a job, they save more than they spend. Over the last months the employment has changed from bleak, to somewhat optimistic. The pace of job loss has slowed considerably and we have gained jobs each of the last several…

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Don’t Buy Anything New or Apply For New Credit After Applying for Your Loan – How the Fannie Mae Loan Quality Initiative Will Effect New Mortgages

Another new change in the mortgage industry starts today, June 1st – the adoption of the Fannie Mae Loan Quality Initiative. This initiative is an order from Fannie Mae, the largest buyer of mortgages in the mortgage aftermarket, that all lenders who want to sell them loans must do extra due diligence, and check to make sure that there are no red flags that the lender would have otherwise missed. Most of these changes are ones that have already been adopted over the last year, like running social security numbers through a data base to make sure they are correct, and pulling IRS tax transcripts on every transaction. But there is one new ingredient to this mix which is likely to throw the industry for a loop, and delay and in some cases blow up the closing on the last day. This new change is that starting with applications taken…

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