The economic news released last week was mostly positive, but there are concerns on the horizon. The consumer confidence index rose to 70.4 last week, the highest level since February 2008. Durable goods orders came in 2.7% higher for January, and initial unemployment claims dropped by 22,000 to 391,000 for the week, a sign that companies are starting to hire again. Manufacturing growth in the Richmond and Kansas City Fed surveys also came in stronger than expected. On the other side, the GDP (Gross Domestic Product) for the 4th quarter of last year was revised down to 2.8% from 3.2%, largely due to cutbacks in state and local government spending. With austerity the new watchword, this trend is sure to continue. But the big news this week was what was happening in Libya. Over the last month the desire for freedom has spread like wildfire throughout the Arab world. Tunisia and Egypt fell relatively peacefully. But with Gadhafi willing to slaughter his own people in order to remain in power, the ending here is still uncertain. Because of the violence in Libya, oil prices have spiked, adding another layer of fear for the world economy.

When oil prices head up, this is usually looked at as a clear inflationary sign. But it is more complicated than that. Oil prices affect not only the price of fuel, but everything from crop prices to chemicals to the costs of basic manufacturing. Higher fuel prices add to transportation costs, which also adds to the cost. When oil prices rise it puts pressure on everything else further up the chain. If the economy was booming, these extra costs would be tacked on to the costs of all the goods and services, which builds the inflationary spiral. Now, with unemployment so high and the economic recovery still fragile, it will be harder to pass along the increases. When consumers are faced with higher costs but their income isn’t going up at the same time, they are likely to cut spending. Over the last week the stock market has been heading down, and bonds have rallied as money flows toward safer ports. As a result, mortgage rates have improved this week.

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 580. 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 Current Quote – FHA 203k Rehab and Renovation loans are now available as 30 year fixed or 5-1 ARMs.

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

Here we go again. Following on the heels of Fannie Mae and Freddie Macs mortgage cost increase, as part of the new budget released this week the cost of an FHA mortgage is going up. Again. Last fall FHA tinkered with their fee structure, lowering their Up-Front Mortgage Insurance Premium (UF-MIP is usually added back and rolled into the mortgage) while increasing the annual premium, which is paid as part of your monthly payment. The new increase goes into effect in April and will raise the cost of buying with an FHA mortgage by .25% per year, or a total of 1.15% of the loan amount each year, divided by twelve. So if you are buying a $200,000 home with the minimum 3.5% down payment, this translates into an increase of about $40 in the monthly payment. An extra $40 per month is probably not enough to push most home buyers out of the purchase market, but it is an added cost which will cut down on purchasing power and strain budgets just a little bit more.

You can look at this cost increase as a sign of FHA’s success. A few years back, FHA market share had shrunk to about 2% of the total mortgage market as private lenders (big banks and brokerage houses, mostly) came in with a whole array of loan products available for anyone who had a pulse. When the housing market imploded all these players dropped out of the market or took government bailouts to keep afloat. FHA now has about a 40%  share of the mortgage market because they are the only option left for most home buyers who don’t have a big down payment saved up. By law, FHA has to be self sufficient. The money from their mortgage insurance premium goes into a reserve fund which pays for loans that go bad. Although FHA didn’t have a lot of bad old loans on the books, and they have tightened their underwriting over the last two years to increase their loan quality, the fact that their volume has exploded means that they need more money to shore up the fund against the risk of future defaults.   

The good news is that this keeps FHA solvent. FHA has started sending signals that they are getting more aggressive in some areas. We have come out with a new program to approve home buyers with lower credit scores, and the rumor is that FHA will be coming out with a 203k renovation loan for investors. There is no doubt that FHA’s success is crucial to the recovery in the housing market.The increase in cost is just a price that has to be paid.

Free Home Buyers 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

Signs of optimism and Egypt were the big market movers in the mortgage bond market last week. Initial unemployment claims fell more than expected the prior week, which either means that the economy is really heating up, or that with big snow falls across the country, less people were able to make it in to file the paperwork. Retail sales were up and credit card balances have increased for the first time since June 2008, a sign that consumers are becoming more comfortable and possibly that the banks are easing a little. The University of Michigan consumer confidence index rose to 75.1, the highest level in the last 8 months. On the downside, the trade deficit increased, largely as a result of higher oil costs, and Corelogic released a report showing home prices slipping again in December. The markets were focused on Egypt for much of the week, and with President for life Mubarek now having stepped down, the initial reaction has been relief, but the big question will soon shift to what comes next, and will this be an improvement, or not. The net result of all this activity is that mortgage bonds continued their slide early in the week, but ended on a strong note. Mortgage rates are about the same as where they were last week, but, for now, the trend is positive. Mortgage rates are still extremely volatile, and with the new federal budget released today and a whole host of economic indicators coming out this week, it will continue to be volatile.

In other mortgage news, the Obama administration released their report on what they want to do with the GSEs, Fannie Mae and Freddie Mac. Since the credit bubble popped, almost the entire mortgage market has been under government control. There are a few private Jumbo lenders, but well over 90% of the loans issued over the last 2 years have been backed by FHA, Fannie Mae or Freddie Mac. This isn’t a healthy situation, and everyone wants to see the government get back to a more passive role and have the private sector get more active. But the report seemed more like a wish list than anything that will realistically happen anytime in the near future. It gave 3 options for the government role, but also called for higher down payments and tighter underwriting criteria (this part has already happened). This would be a fine plan to sell if time machines were available and they could go back in time to right before the housing bubble was starting to expand and implement it then. But that might not have worked either, as a recent report showed that it wasn’t Fannie or Freddie that caused the housing melt down (though they did their share by following the lead in order to gain back market share) but the private market, big banks and brokerage houses, which engineered and pushed all the high risk loan options (sub prime mortgages, no income loans, pick a payment loans and the like) in a drive for short term profit. Getting the private market back in the market is a worthy goal, but until the real estate market has fully stabilized, none of this can be put in place, and if we see any changes at all, they will be baby steps, not the drastic over haul outlined in this plan.

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

“How low of a credit score can I have and still be able to get a mortgage?”

This is a question I hear almost every day. One of the frustrating things for many people trying to buy their first home, has been dealing with old credit problems. Some people consistently have problems with credit, and if you just don’t pay your bills on time (or at all) and if you don’t take credit seriously, buying a home and qualifying for a mortgage is probably not an option. But for many people their credit has been damaged due to isolated life events. Too many people have run into problems over the last few years, often as a result of losing a job, medical issues or other traumatic events. For these people, the real frustrating part is that once their lives are back on track and they are back to paying their bills on time, it is still hard to improve their credit scores. To add insult to injury, mortgage guidelines have continued tightening over the last few years. A few years ago credit scores pegged 620 as the lowest level of good credit, that is, credit scores good enough to qualify for the best rate on a conventional mortgage. Now it takes a Fico score of 740 to get the best terms, and those with scores under 700 should expect higher rates or bigger fees.

FHA is much more common sense in regards to credit. With FHA your whole credit profile is considered and the scores themselves aren’t nearly as much of a focus. FHA underwriters also base their decisions on letters of explanation telling what happened to your credit, why it happened and why it isn’t likely to happen again. FHA is much more common sense, and FHA doesn’t have a minimum credit score that they require. But over the last year almost all of the lenders who fund FHA loans have added overlays (additional requirements) that have raised the required FICO score to a minimum of 640. There might not be much difference in the credit profile between someone with a 640 score and someone with a 629 score. But statistically, credit scores under 640 are much more likely to default on their loans. The sad thing about concentrating on credit scores is that it doesn’t take the human element into effect, and there are people who have scores where the credit is improving, and others with the same scores where the credit is going down. Up until now they have all been looked at the same way if their score was below the 640 minimum. But this is now changing.

Prospect mortgage, the company I work for, has just come out with a new loan program that allows people to buy homes with Fico scores between 580 and 639. In my opinion, this is a huge step in the right direction. This isn’t a new version of sub-prime and it doesn’t mean anyone with a credit score over 580 is now able to get a loan. What it does mean is that those people who have been doing the right things and who can show they are able to afford a home payment  won’t be frozen out simply because their Fico scores came in too low. This program is going back to old school FHA underwriting. In order to qualify for this program, we need to see that even though your credit scores are lower than what is normally called for, you are handling your credit responsibly and whatever caused the problems is all past history. The real key to this loan is affordability. Having a payment that fits in your budget means you aren’t stretching too far, means less stress on your finances, so one of the biggest factors for approval will be showing that both your total mortgage payment and your mortgage payment plus all your other debt, are at comfortable levels. If your payment is going to jump with the new mortgage compared to what you have been paying for rent, we will need to see that you have been saving regularly and that the higher payment won’t be a burden.

This new program is an FHA fixed rate mortgage. Here are some of the features of this new loan:

• Borrowers credit scores between 580-639.

• Available for purchase loans only.

• 3.5% down payment.

• All the funds for closing can come from a gift.

• Available for single family homes, townhomes, condos and 2 unit buildings (rental income can’t be used to qualify).

• Ratios (this is to show affordability) are 31% of income cam be used for the housing payment and 43% of income can go toward the housing payment plus all other debt. These ratios can be increased if there are at leas 2 compensating factors.

• Can apply 2 years after a chapter 7 bankruptcy discharge – 12 months after chapter 13.

• 2 months reserves required (based on 2 times the full mortgage payment).

• Home buyer counseling is required.

The rates on this program are higher than for conventional FHA mortgages because of the higher risk. This program won’t help everyone, but it will help a lot of people buy a home now. If you are looking to buy a home but worried that your credit will hold you back (or a Realtor working with clients who have had problems in the past), give me a call.

Free Home Buyers 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

Mortgage rates had been in a holding pattern over the last month as the market considered which direction to run in. But last week mortgage bonds fell through the range, sending mortgage rates sharply higher. The news over the last month has been mixed, and open to interpretation about whether the economy is really improving or if this is just a head fake in a positive direction, while the economy remains distressed. Part of the issue is that we are exploring uncharted waters in economic theory. The two big problems in the economy are the housing market and the high rate of unemployment. The Fed sees these issues as signs of deflation, and has pumped a steady stream of new money (QE2) into the economy to try and lower rates to put some life back in housing and to get the banks to lend again, which will create new jobs. This is there second go around with this strategy, and while the first version worked as hoped for, this time the plan has run into problems and the law of unintended consequences has kicked in. With all this new money in the system, bond holders are now more worried about the debt load and how we will be able to pay this money back. Since the program started rates have increased sharply, and though the stock market has surged higher, so has the price of gas and a whole host of other commodities. This puts more pressure on consumers as costs are going up while their paychecks are not. But if more jobs are being created and the economy is really growing, a little (?) inflation is a minor concern. Which brings us to the January Unemployment report released last Friday.

The monthly employment report is released the first Friday of every month, and it is always the most anticipated and influential report for the markets. There are actually two reports issued at the same time, and each report uses an entirely different methodology for coming up with the numbers. Going into the report, the expectations were that the economy would add about 150,000 new jobs (one report) and the unemployment rate would tick slightly higher to 9.5% from 9.4% (using the other methodology). Instead, the reports showed only 36,000 new jobs created, but the unemployment rate dropped all the way down to 9.0%. What this means is open to all sorts of interpretation. The markets blamed the lack of new jobs on the snow and bad weather, and took the lower unemployment rate as a sign that the economy had really turned the corner. Others said the lower jobs number was probably skewed by the weather, but even the forecast was barely keeping up with new entrants in the job market and the drop in the unemployment rate was because so many discouraged workers had failed to respond to the survey and were no longer looking for work. We won’t know which of these reports is more correct until we see confirmation on the report released next month. Rates have increased, but we are still near all time lows. If you are looking to buy a new home this year, this is a great time to start looking.

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

In this installment of the Chicago Video Home Buyers Guide, we talk about what is involved with starting a mortgage pre-approval. Getting approved for a mortgage is the first step in buying a home. Knowing

how much of a payment you can afford, and how much cash you will need to close allows you to set your sites on a home that is within your price range and your budget. Mortgage guidelines have tightened over the last few years, and knowing what is involved, and what you can do to put yourself in the best position, can make the difference between being able to buy a new home, and continuing to rent. As part of a free mortgage pre-approval, a good loan officer will not only tell you what you can afford and what the best way to buy will be, but can also offer advice that will help you meet your long term financial goals.

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

The tax benefits of owning your own home

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

Free- Home Buyer’s Guide

Free Mortgage Pre-approval

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages