October 2010

FHA Credit Scores Tightening – Home Buyers Looking to Buy, Need to Check Their Credit Early to Make Sure They Qualify

      FHA credit score requirements are moving up again. We, and most other lenders, now have moved to a minimum 640 middle score for FHA approval, and some wholesale lenders now require a minimum of 660. If you read the FHA guidelines, the minimum score is only 580 (though there is no way you will get a loan with that score), and with the economy soft and the housing market down, cutting off otherwise well qualified buyers doesn’t seem like a good way to achieve their goal of offering more families a chance to buy a home of their own. So what gives? The problem is that this tightening of credit standards is a direct result of FHA success (I’ll get into this more in a minute). As anyone who reads this blog regularly knows, I am a big fan of FHA mortgages. FHA has always offered common…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 10/22/2010

The news released this week was somewhat positive, but still in a low range. Housing starts rose and home builder sentiment is the highest it has been since the beginning of the summer. But both these measures are ticking up from depressed levels so low it hardly makes a difference. The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 0.3% in September. Initial unemployment claims fell by 23,000 to 452,000 for the week ending October 16. On the other side, industrial production and retail sales both came in lower and below expectations. But the economic reports aren’t the real focus now. The big question for those following mortgage rates, is what will the Fed announce at its next meeting, and are they about to start a new policy of quantitative easing? From hints dropped in speeches by Fed…

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When Will Mortgage Rates Drop to 4.00% (or 3.75% or …)?

One question I hear all the time, is – When will rates drop to 4.00% (or 3.75% or whatever mortgage rate is conceivable but just out of reach)? Mortgage rates are at all time lows, but it is human nature to always want a little better than what is available at the time. No one wants to take on a loan now and then have mortgage rates drop even lower. I usually hear this question after the market has gone in the wrong direction for a few days, but I was hearing variations of this last year (when will rates drop to 4.5%). Sometimes the question comes up after someone is referred to me by a friend or co-worker who just got a great rate, or by someone who heard someone talk about the unbelievably low rate they just locked into. In cases like this we don’t always get the…

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Chicago Illinois Mortgage Rates Week in Review for the Week of 10/08/2010

There were two major events last week which will have major impacts on the real estate market. The first was the release of the monthly unemployment  report Friday, which served as confirmation that the Fed will begin a new wave of quantitative easing next month. It wasn’t that the report was so bad. With 95,000 total job losses it was in line with what we have seen much of this year, and the private sector actually hired more workers than expected. But we are stuck in a spot where too many are looking for jobs and even profitable companies are afraid to add more without a real sign that the worst is over. The Fed is expected to begin goosing the money supply with an announcement at their next meeting in the beginning of November, by buying up treasury bonds and mortgage backed securities. In a way, they are cranking…

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Unemployment Edges Higher – Added Ammunition for New Fed Intervention

The monthly jobs report is always the most watched indicator of strength in the economy, this month the focus has been more intent because this is also the last report before the Fed open Market Committee meats at the beginning of November. The reason for the extra focus is that the Fed has indicated that they are prepared to move forward with another round of quantitative easing, or pumping more money into the economy in an effort to shock the economy back to life. A good report showing higher than expected job creation would likely push this effort back into a wait an see mode. That didn’t happen. The BLS report showed a gain of 64,000 private level jobs, but this was offset by the loss of 159,000 government jobs (census workers and local government job losses), for a net loss of 95,000 jobs. The two previous month’s reports were…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending October 1 2010

Last week was mostly a holding pattern for mortgage bonds, and this week looks to be the same – at least until Friday when the monthly employment report is released. Mortgage rates have been in a range over the last few months, and though there was a lot of economic data issued last week, it was just enough to keep mortgage bonds bouncing around in the range. The Case-Shiller 20-city housing price index rose 0.6% in July after a 0.3% increase in June. This sounds like good news, but keep in mind, the index is based on a 3 month average, and we were still feeling the effect of the tax credit 3 months ago. A truer measure will be what happens to the index this month. The index is off about 29% from its peak. The consumer confidence index fell to 48.5 in September from a downwardly revised 53.2…

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