A lot of news on the health and direction of the economy came out last week. GDP was up solidly, increasing at an annual rate of 3.2%, extending the trend of the last two quarters. The consumer confidence index rose to a reading of 60.6, the highest level since May. Home sales increased last month, while Case Schiller reported that home prices are still soft. The Fed concluded their two day meeting and released a statement that despite a pick up in the economy and even though commodity prices are moving higher, their bigger concern is still the risk of deflation in the economy. Their quantitative easing program will continue as planned. But despite all this information coming out, the biggest impact on the markets and on mortgage rates last week was the unrest in Egypt.

Mortgage rates have moved up and down in a tight range since the first of the year. Mortgage rates are largely influenced by what happens in the mortgage backed securities MBS) market. As a rule, mortgage rates tend to improve when the news (economic mostly) is bad, and get worse when the news is good. Money flows back and forth between stocks and bonds. When the news supports a strengthening economy more of the money flows into stocks, which are considered riskier, but offer a higher return. Bonds are a fixed investment, paying a set rate over time. If the economy improves this carries the risk of inflation, which means the bondholders will be paid back in cheaper dollars. The news from Egypt last week caused a flight to quality in the investment community, or money flowing out of stocks and into bonds because they are considered safer. Any unrest causes concern, because the outcome is unknown. The biggest concern about the unrest in Egypt is that something will happen that will shut down the Suez canal, which controls the oil flow from the Mideast. With this unrest, mortgage bonds broke through their range, and rates have improved for the week. If the markets calm down and the risk in Egypt recedes, the flight to quality effect could quickly disappear. Long term the direction of mortgage rates is still going to be based on the fear of inflation and whether the economy is really improving, or not. The biggest news in that regard is the jobs report for January that will be released on Friday.

Here are the current Chicago 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, best FHA rates assume a 660 Fico score, but loans are available with credit scores as low as 620. Mortgage rates in other states may be slightly different, give me a call and I will give you an accurate quote for your particular situation. 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 will take the time to find the rate and program that is best for you:

Conventional loans up to $417,000

For Jumbo loans over $417,000

*(Another option is to break your Jumbo loan into 2 parts a 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.)

** 5-5 ARM is fixed for first 5 years, with 2/6 caps it can’t go more than 2% above the start rate for the next 5 years. 2% cap for next 5 years – so a blended rate over 10 years is no more than 1% over the start rate. Super Jumbos available.

FHA LOANS 3.5% down payment FHA Maximum varies by County

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

FHA 203K Rehab Loans – Call for CurrentQuote

VA Veterans Administration 0 Down Loans

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.

Free Home Buyers Guide

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

The Federal Open Market Committee (FOMC) finished their 2 day meeting and issued their report yesterday afternoon. As expected, the message was very similar to what it has been over the last year, and as expected the Fed Funds Rate (the rate they charge their best customers, the big banks) will continue at 0-.25%. The biggest change was an acknowledgement that commodity prices have run up, fueling inflation concerns. Despite this, the Fed maintains that inflation is still “trending downward” and is expected to remain low, and their primary concern continues to be the high unemployment rate. Although there are signs that the economy is picking up, it isn’t improving enough to add any meaningful job creation. So the Fed will continue with their $600 billion quantitative easing program as planned, which will continue through June of this year. Mortgage bonds (which go opposite direction to mortgage rates) fell after the release, as bond hawks major worry is an increase of inflation.

The most interesting part of the release to me though, was that all the Fed members voted to accept this policy, the first time this has happened since December 2009. Dallas Fed President Richard Fischer voted for the policy, a change from previous months, and though several new supposedly hawkish members rotated in as voting members for this meeting, the consensus to continue the policy was unanimous. The goal of QE2 has been to keep mortgage rates low to help stimulate business growth and a stronger housing market. This hasn’t worked out as planned. At least not yet.

Here is the full text of the Fed release:

Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions. Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and 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, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Free- Home Buyer’s Guide

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

In this installment of the Chicago Video Home Buyers Guide, we go over the tax advantages of owning your own home. The government encourages owning your own home and real estate is treated differently from every other

purchase. When you buy a home, you get to write off the amount you pay for mortgage interest as well as the amount you pay for real estate taxes. This means that the government is, in a sense helping you pay for your home, and you can afford a higher mortgage payment than the equivalent rental payment. Combined with other financial advantages of buying a home, this is a strong incentive to buy, and makes real estate more affordable.

The Chicago Video Home Buyers Guide will be released one segment at a time over the next few months. If this segment is helpful, please pass it on to friends or others who are thinking of buying their own home. Let me know your thoughts. Thanks for watching.

Other videos in this series -

Equity build up – How you build value by paying down your mortgage

How leverage and home appreciation will build value over time

Free- Home Buyer’s Guide

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

It is becoming clearer that we are in a two tier economic recovery. On one hand, the economy is showing signs of growth. The stock market has been roaring, both the New York and Philadelphia Fed reports released last week showed better than expected growth, and new unemployment claims for the week were down again, a trend that shows employment is starting to stabilize. On the other hand, unemployment is still way too high and even the signs of growth are unlikely to do much to bring the rate of unemployment down, and the housing market is still on life support. For those looking at the upper tier of the economy, optimism is the rule. Stock earnings reports released last week came in mostly good. I have friends in the trucking industry who say that business is booming, and when things are being shipped this is usually a good sign for manufacturing and the economy in general. The biggest fear from this outlook is inflation. Oil prices have surged over the last few months and a whole list of other commodities are spiking higher. Some analysts are worried that the economy will overheat, and are calling for a big reduction in government spending and expect the Fed to raise rates sometime this year.

The outlook is much different from the lower tier. About 40% of those unemployed are long term unemployed, having been out of work and searching for a job for a year or more. The longer they are out of a job, the harder it is for them to find a new one. Most experts expect the unemployment rate will remain high for the next several years. In most recoveries, housing leads the way. But the big concern here is still over supply. Though home sales were better than expected in December, more inventory of homes for sale came on the market. Low home prices are bringing out new buyers and affordability is high right now, but there are still more sellers (banks) than buyers. In this tier, deflation is still the big fear and low mortgage rates are going to be a big part of the solution to get this part of the economy back on track.

So we have two competing realities in the market, and the solution for one side is the opposite of what is called for in the other. Mortgage rates rose slightly this week as the focus in the bond market was on the growth side. This week will will be an interesting one for the direction of mortgage rates. Not only are there a slew of new economic reports set to be released, but the monthly Fed meeting occurs Tuesday and Wednesday. No one expects them to change their direction, but this meeting a new group of Fed voting members will rotate in (while others will rotate out). Future Fed direction may be seen by how many dissenting votes there are when the Fed releases their statement.

 Here are the current Chicago 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, best FHA rates assume a 660 Fico score, but loans are available with credit scores as low as 620. Mortgage rates in other states may be slightly different, give me a call and I will give you an accurate quote for your particular situation. 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 will take the time to find the rate and program that is best for you:

Conventional loans up to $417,000

For Jumbo loans over $417,000

*(Another option is to break your Jumbo loan into 2 parts a 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.)

** 5-5 ARM is fixed for first 5 years, with 2/6 caps it can’t go more than 2% above the start rate for the next 5 years. 2% cap for next 5 years – so a blended rate over 10 years is no more than 1% over the start rate. Super Jumbos available.

FHA LOANS 3.5% down payment FHA Maximum varies by County

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

FHA 203K Rehab Loans – Call for CurrentQuote

VA Veterans Administration 0 Down Loans

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.

Free Home Buyers Guide

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

There are a lot of good reasons to buy a home now. Affordability is the highest it has been in over a decade, interest rates are still near all time lows, home prices are selling for a big discount, mortgages are available with low down payments and realistic qualifying guidelines, there is a huge inventory of homes to choose from and with it being such a strong buyers market, seller concessions (the seller paying for closing costs and such) are now the norm. As I have written regularly, if you don’t own a home, now is a great time to buy one. Let’s add one more big reason to the list. Hedge fund billionaire John Paulson, a noted contrarian and one of the first investors to bet against sub-prime mortgages at the height of the housing bubble,  says that homes are now a screaming buy and the price of housing will soar in the coming years. At a recent speech, Paulson said:

“If you don’t own a home buy one,” Paulson recommended; ” if you  own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

Paulson isn’t urging you to buy based on affordability, his contention is that we are on the road to hyper-inflation. The Fed, through quantitative easing, is pumping up the money supply as they fight what they see as the most important concern, the risk of deflation. With unemployment high and home prices low, the Fed is trying to create a very low positive inflation which will prompt the banks to get more aggressive in lending their funds, which is needed to get the economy back on track. Paulson is convinced that the Fed will overshoot, and expects that we will have double digit inflation by 2012. He is putting big bets on gold, and has started a housing recovery fund.

In order to see why this may be a big deal, a little history is needed. John Paulson was one of a handful of big investors who called the housing bubble and made fortunes because of it. He was a middle level hedge fund operator, primarily dealing with distressed companies, when in 2006 he started making big bets against sub-prime mortgages and the overall housing market. When the housing market tanked, he clocked in a profit for his firm of $15 billion dollars, which is considered the biggest trade ever.

Being right then doesn’t mean he will be right this time. But it doesn’t take hyper-inflation to make real estate a strong investment (let alone a great place to live in). Slow and steady appreciation builds wealth over time, and you have to live somewhere. There are a whole lot of uncertainties in the economy now, and we will have to see how this all plays out. But history shows that the best time to buy something is when it is cheap and most people are scared to buy it. Homes fit that category now. So whether you are buying your first home, a second , third or are going to lend the down payment to a relative so they can buy, if you need a mortgage, give me a call.

Desplaines Illinois property management

Free- Home Buyer’s Guide

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

Two weeks into the new year, the consensus is that the Fed quantitative easing program has been a dud. The intention of the program was too pump new money into the economy by buying treasuries and other bonds, as a way to drive interest rates lower and slowly re-inflate asset prices. The Fed’s big worry has been the risk of deflation. The concept here was to battle deflation by adding a little positive inflation into the mix. This concept has worked before when the Fed ran a similar program last year, but this time as the Fed rose up for what they considered a slam dunk, the markets slapped the ball back in their face. Over the last few months there have been signs that the economy is improving. It is still not clear that this is sustainable, but it is enough to refocus thinking from the fear of falling to the fear of over-heating and running up our debt and bankrupting the country. Instead of achieving their stated goal, the main effect of QE2 so far has been to run interest rates up, prop up the stock market and pressure the dollar which means oil prices have spiked higher. We still have some major problems associated with deflation, the housing market is still a mess and unemployment is high and not likely to get better for years. The Fed still may be proved right about deflation in the long run, but the money machine they control is more complex and the law of unintended consequences is now in play. From street level this looks a lot like stagflation, where the economy is soft but prices for gas and groceries are going up. This round of QE2 will run its course, but the Fed will need to go back to the drawing board to come up with a new way to achieve its goals. Barring a sudden down draft, there will not be a third round.

Reports released last week showed some doubt about the strength of the new recovery. Retail sales in December came in much better than the last two years, but a lot lower than what was expected, an increase  of .4%. The expectations were that consumers were ready to get back to old habits and spend big on Christmas, but instead, much of the spending was again focused on big bargains and discount shopping, which does not look good for retailers bottom lines. The CPI (consumer Price Index), the biggest measure of consumer inflation, came in with an increase of ,5% for the month, a hot reading. But when oil (mostly) and food costs which tend to be more volatile, were backed out, the core reading was at plus .1%, showing overall inflation is under control. The University of Michigan consumer confidence index slipped lower, showing that people are still worried.

The reaction in the interest rate markets to all this news has been one of consolidation. Rates have improved some, but the question now is whether this is a pause before heading higher again, or are we about to drop back closer to the levels rates were at before the Fed announced their plans for easing. At this point there is a lot of uncertainty in the market and rates could still go in either direction. Reports released this week will focus on the strength of the housing market, and the markets are still watching the situation in Europe where the strongest economies are holding up the weaker ones so the Euro won’t crack. Even with the run up in rates over the last few months, mortgage rates are still near historic lows. If you are thinking about buying a home this year, especially if you plan to be ready for the Spring market, this is the time to be pre-approved for a mortgage. If there is anyway I can help, give me a call.

Here are the current Chicago 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, best FHA rates assume a 660 Fico score, but loans are available with credit scores as low as 620. Mortgage rates in other states may be slightly different, give me a call and I will give you an accurate quote for your particular situation. 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 will take the time to find the rate and program that is best for you:

Conventional loans up to $417,000

For Jumbo loans over $417,000

*(Another option is to break your Jumbo loan into 2 parts a 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.)

** 5-5 ARM is fixed for first 5 years, with 2/6 caps it can’t go more than 2% above the start rate for the next 5 years. 2% cap for next 5 years – so a blended rate over 10 years is no more than 1% over the start rate. Super Jumbos available.

FHA LOANS 3.5% down payment FHA Maximum varies by County

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

FHA 203K Rehab Loans – Call for CurrentQuote

VA Veterans Administration 0 Down Loans

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.

Free Home Buyers Guide

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

One of the peculiarities of the lending environment since the housing bubble burst, is how the idea of what makes up a good borrower has changed. Back when conventional mortgages (those loans made to Fannie Mae and Freddie Mac guidelines) were available for anyone with a pulse, a good borrower, that is someone who can get the best rate on a mortgage, was considered a borrower with a credit score of 620 and above. Mortgage qualification was too easy then, and as the housing market floundered, qualifications have continually ratcheted down, making conventional loans harder to get and more expensive for those who aren’t in the best category. It started out with Loan Level Price Adjustments (LLPAs) or price hits, based on credit scores. Now it takes a credit score of 740 or above to get the best rate, and if your score is below 700 the price hits mean a big increase in the rate you will be able to obtain. There are also LLPA price hits for the type of property, so buying a multi-family home is more expensive than buying a single family home. If you buy a condo with a conventional loan, you now need to have 25% equity or down payment in order to get the best pricing on a condo.

With a new change by both Fannie Mae and Freddie Mac, conventional loans are about to get more expensive again, and this time the changes will affect those borrowers who have always been looked at as the gold standard of borrowers, those with excellent credit who are putting 20% down on a home. The new price adjustments are based on the borrowers credit scores and the loan to value (amount of the mortgage compared to the appraised value of the home) and combined loan to value (which includes the total of mortgages, including second mortgages and home equity loans) The surprising thing about this is that there are now price hits for those who up until now have been considered the top credit risks with both top credit scores and down payments of 20%, but less than 25% equity. The price hits get bigger if your credit scores aren’t perfect, and if you have more than one mortgage the price hits will make a big, big difference in your loan pricing.

Most consumers won’t end up paying these price hits in cash. As a rule, they will be built into the loan price and when you are quoted a rate on your mortgage these will be built into the rate. In other words it may not cost you more in fees, but for most conventional borrowers, the rates just went up. These changes go into effect for loans delivered to Fannie Mae and Freddie Mac as of April 1st 2011, but in order to deliver these loans on time, lenders are starting to implement these fees now, or will be soon. The frustrating thing about this is that with the housing market still so weak, why are we (both Fannie and Freddie are government owned entities now) making it harder and more expensive to get financing? The long term plan is for Fannie and Freddie to become self sufficient again, and the plan here is to reduce risk and increase their fee income. Everyone is concerned with reducing risk and it makes sense that if you add more fees and toughen requirements this will help lower your risk. But when borrowers with virtually no risk are targeted, this means we have gone too far.

FHA loans are becoming more attractive for more borrowers – even those who can qualify for a conventional mortgage

As conventional mortgages become more expensive and harder to qualify for, FHA mortgages are becoming an even better option for many borrowers. FHA loans aren’t for everyone, if you have 20% for a down payment, even with the price hits, buying conventionally is a better option because it eliminates the mortgage insurance (FHA has mortgage insurance no matter how much of a down payment you put down). But the truth is, most borrowers now, especially first time home buyers, are scrounging just to get the minimum down payment. FHA is now a great option for many borrowers who could be approved for conventional, and if you are buying a home, you should have your loan officer run your situation with both scenarios – FHA is often the better option when you look at the full situation.

Here are some of the features and advantages of buying a home with an FHA mortgage:

• FHA mortgages require only 3.5% down payment.
• With FHA financing you can use a gift for the entire down payment and all the closing costs.
• FHA mortgages allow up to 6% of the purchase price as a seller concession, which can be used to pay for closing costs.
• FHA mortgages rates are comparable to conventional loans.
• FHA allows much lower credit scores than conventional mortgage require, (640 is the required score unless there is a larger down payment). The focus is on the entire credit profile, not just the score, and FHA is more lenient of past problems once you are back on track.FHA has minimal loan level price adjustments or price hits.
• Most borrowers can qualify for more with an FHA mortgage.

Free- Home Buyer’s Guide

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

If you are looking to buy and rehab a home, or if you have a home that needs some work and you think the Chicago FHA 203k renovation loan is the answer, the first step is to make sure you qualify and that this is the right solution for your situation. Getting pre-approved for an FHA 203k loan involves two parts. First making sure that the property improvements you are planning on willl work with the program, and second, making sure that you will qualify for the Chicago are FHA 203k rehab mortgage. The qualification for an FHA 203k is the same as qualifying for a regular FHA loan. Some of the advantages include:

• The down payment is as little as 3.5%.
• Credit standards are much more common sense than with conventional.
• 640 minimum credit scores.
• All the down payment can be a gift.
• Co-signors are allowed.

There are a lot of true advantages to buying with an FHA mortgage, and the additional advantage with the Chicago area FHA 203k loan is that you can add all the costs of repairs into the loan and buy and rehab your home with a minimum down payment and an affordable interest rate.

If you think the FHA 203k renovation loan might be the solution for your situation, give me a call and I will go over your situation and the details of what you are planning on doing, and help you get started. All it takes is a phone call to see if this is the right thing for you.

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Chicago FHA 203k Mortgage                   FHA 203k rehab loans in Chicago

You don’t need to look at a calendar to know we are starting a New Year. My gym is crowded again, a regular January occurrence. Diets are in again after a December of eating way too much. And my phone is ringing with renters just testing the water to see if they are in shape to buy their first home later this year. This is expected in January because buying a new home is consistently one of the top financial resolutions. This year, with a combination of low interest rates and low home prices, buying a house is more affordable than it has been in decades, so I expect buying a home is on a lot of peoples list of resolutions for the year.

If you are even thinking about buying a home this year, even if you don’t plan on buying until later in the year, there are some steps you should take now.

Make out a budget – Buying a home is a big step, and you need to make sure the new payment will fit into your budget before you even start looking. Too often home buyers skip this step, and then are stressed later on when the cost of home ownership takes up more of their income than they expect. When you put together a budget, make sure that you include not only the direct costs of owning a home (the mortgage payment, taxes, insurance and association fees) but also the costs of maintenance and repairs. Often after buying a new home you will buy new furniture and appliances, lawn mowers or other items. If you are planning on buying stuff for the home, and will use credit to do so, make sure you include the costs in your budget. Also, if you know you will have a big expense coming up, like a new car payment, allow for this in the budget, too (if you aren’t sure how to start a budget, give me a call and I can send a sample form over to you). The good thing is, you can afford a higher payment when you buy a home than if you were renting. This is because the interest you pay on the mortgage and your real estate taxes are tax deductable. For many people, the mortgage payment seems easier to pay over time as they get used to the payment and their income increases. But don’t make the mistake of stretching too far and buying more than you can afford

Start thinking of what is important to you in a home – The more thought you put into what you want before buying a home, the better off you will be. Buying a home is often an emotional decision, and when you find the home that feels right to you, may not meet all your needs. But if you do your homework upfront and think about what features of a home are important, what is absolutely necessary and what you would like but could do without, you are more likely to find a home that is right for you in the long run. Things to think about may include what type of home you are looking at (single family, condo, townhome or whatever), as well as features of the home, location and whether you are looking for a home that is in great shape or one that might need some work. 

Research the areas you are interested in – Before starting to look or even putting much time in searching on the internet, narrow down the areas you are interested in buying in. One common mistake when starting to look for a home is having too broad of a search area. If you want a home on the north side of Chicago, or in the western suburbs, this covers a whole lot of ground. By thinking of what are the key features for you, this can help you narrow down the best area to look. Are you looking for something new, or something in an older area? Is the school district important? Is being close to work or public transportation one of your key needs? How ever you do it, narrowing down the areas you are looking in early will make the home search easier and less stressful.

Run your credit report and make sure there are no mistakes or problems that need to be worked on –Credit is more important know than it has ever been. You need to meet minimum standards just to be able to qualify for a mortgage, and having a lower score can cost you money when you get the loan. Too often home buyers assume their credit is good, and don’t find out about problems until they have already found the house they want to buy. Even if you always pay your bills on time, you can still have issues on your credit report. Sometimes these are mistakes, other times they can be small items that can easily be fixed, as long as you know about them in time. Make sure you get a copy of your credit report early. This is part of a normal pre-approval, and a good loan officer will not only run your credit report, but will help advise you on what you can do to present yourself in the best way. If more extensive work needs to be done, a good loan officer can help you with that, too.

Start planning for where the down payment and cash needed to close will come from – You don’t need a lot of money to buy, but you will need some cash. FHA loans are available with as little as 3.5% down payment. But even if you have the money for the down payment saved up, you will also need money for closing costs and to set up the escrows. This may mean more cash than you expect. But if you know what to expect and you plan ahead, these are obstacles you can get around. For example, you can ask the seller to pay for the closing costs as part of the negotiation to buy the home (if you wait until you already have the contract it could be too late). Maybe you can get a gift from a relative? This is a common option for first time home buyers. If you don’t have all the savings now, will you be getting enough from a tax refund? Is a loan against your 401K an option? There may be ways to structure the purchase, but you need to give some thought to this early.

Talk with a good loan officer and get pre-approved for a mortgage – This should be one of the first things you do when you are getting ready to start looking for a home. Getting pre-approved can start with a short phone call, or you can fill out a free and confidential on-line pre-approval form. Either way, a mortgage pre-approval is a way to look at what you are hoping to do, and matching your needs and goals with the best mortgage options for your personal situation. A true pre-approval will require the same documentation we would need if you already had a home, paystubs, tax papers, bank statements and the like. It will also require a full credit report.  A good loan officer will not only tell you how much of a loan you can qualify for, but will be a guide throughout the entire home buying and mortgage process. If you have any questions or are ready to start with a pre-qualification or mortgage pre-approval, give me a call, I would love to help.

If buying a home is one of your New Year’s resolutions, don’t put it off until you are ready to buy. Starting the process early and putting some thought and effort into this now will make for a better decision later on.

Free- Home Buyer’s Guide

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

This is the second installment of the Chicago Video Home Buyer’s Guide and in this installment we go over one of the major advantages of owning your own home, appreciation and leverage.  Property

appreciation, or how home values increase over time, was something that everyone took for granted up until the bubble popped. Home values now are down sharply from where they were a few years ago, but forces are in place which will stabilize the market, and buying now when home prices are so low means home appreciation is much more likely as we go forward. Leverage is when you use a mortgage to buy your home, and when home prices increase, your return is magnified. This is how people can buy a low priced starter home and build equity to move up to a larger home over time. Of course there is no guarantee that home prices will go up, but this has been a major benefit of owning your own home over time.

The Chicago Video Home Buyers Guide will be released one segment at a time over the next few months. If this segment is helpful, please pass it on to friends or others who are thinking of buying their own home. Let me know your thoughts. Thanks for watching.

Free- Home Buyer’s Guide

You can trust in us to get the job done right.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages