January 2011

Chicago Illinois Mortgage Rates Week in Review for the Week Ending 01/28/2011

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…

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Fed Meeting Minutes Released – No Major Changes, Quantitative Easing Policy to Continue as Planned

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…

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Chicago Video Home Buyers Guide – The Financial Benefits of Owning your Own Home – Tax Benefits of Owning Your Own Home

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 Chicago Video Home Buyers Guide – Tax Benefits of Owning Your Own Home 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…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 01/20/2011

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…

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One more Reason Why Now May be the Best Time to Buy a Home – Advice from Multi-Billionaire Investor John Paulson

            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…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 01/14/2011

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…

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FHA Mortgages Will Increase Market Share Again as Fannie and Freddie Increase Loan Fees

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…

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Chicago FHA 203k Mortgage Pre-Approval – It Just Takes a Quick Phone Call to Get Started

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…

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Chicago First Time Home Buyers – New Years Resolutions for Those Looking to Buy a Home in 2011

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…

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Chicago Video Home Buyer’s Guide – The Financial Benefits of Owning your Own Home – Leverage and Appreciation

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 Chicago Video Home Buyer’s Guide – Appreciation and Leverage 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…

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