April 2011

First Time Home Buyers in the Chicago Area – Multiple Offers in a Buyers Market

There is no doubt that we are in a market where the home buyer wields the most power. There is more inventory of homes for sale than qualified buyers, so the buyer has more leverage, which usually means that the buyer can get a better price and terms when negotiating a purchase. This has been the rule, and in a market dominated by foreclosed and distressed properties, I am consistently seeing contracts come in well below the asking price, and usually with the seller paying for some or all of the closing costs. But I am now starting to see an odd new phenomenon – multiple offers on the same property. Multiple offers are usually a sign of a sellers market. A few years back at the height of the real estate boom, as soon as a sign was placed in the yard, a steady stream of buyers were there…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 04/22/2011

A bomb dropped on the financial markets last week when the rating agency Standard and Poors announced that there was an increased likelihood that they would lower the investment rating of US bonds from their current AAA ranking. The US bond has long been considered the safest and most stabile bond, but the increase in the national debt, and the view that congress will do nothing to stop it, has been a source of fear and concern for some time. The debt rating determines the interest rate on the bonds, and if the rating is downgraded the US will need to pay more money to fund their borrowing. A lot of analysts have talked about this problem since the start of the financial meltdown, but S&P’s announcement made it official. S&P doesn’t have the highest credibility in this regard. They were one of the rating agencies that consistently rated junk…

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The Chicago Illinois Mortgage Rates Week in Review for the Week Ending 04/15/2011

Last week marked the beginning of the 2012 Presidential race as President Obama gave a speech on his plans for balancing the budget over time. The backbone of this plan is reinstating the pre-Bush era tax rates on the highest wage earners, along with selective cuts in spending. The week before, the Republican backed Ryan plan was released with similar claims for balancing the budget. The idea behind the Ryan plan is to cut spending drastically, and instead of raising taxes, there will be more tax cuts for the top wage earners. These two approaches to balancing the budget are mutually exclusive, and the approaches on each give the most benefit toward those who are most likely to vote for their party, and the price is paid by the opposition. The philosophies of each are so different that it is hard to see a way that they can come together…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 04/08/2011

The big issue for the market last week was whether the congress could come to terms on the budget to avoid a government shut down. It came down to the final hours, but an agreement was reached where the Democrats agreed to bigger cuts than they wanted and the Republicans eased up on their cuts, and the new budget is about $40 billion less than what was first proposed. But the truth is, all the cuts from both sides are just playing at the margins and won’t have a significant impact either way. The biggest items in the budget, entitlements (social security and Medicare) and the defense budget were not even up for discussion. If we as a country are really serious about getting our financial house in order, these items should be up for discussion at least. Also, a budget is made up of two sides, expenses and revenue….

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Chicago Video Home Buyers Guide – How We Look at Income When Qualifying For a Mortgage

Which mortgage is best for me – Chicago Video Series In this installment of the Chicago Video Home Buyers Guide, we talk about income qualifying, and how your income is looked at when you apply for a mortgage. This is one of the major factors of qualifying for a loan, and for how much of a mortgage you can afford. Part of this Chicago Video Home Buyers Guide- How do we look at your income when qualifying for a mortgage? comes down to income stability, or how likely is your income to continue and how reliably can we predict what you will earn in the future. The other part of this is affordability, or how you can fit the new mortgage into your budget. For this we look at ratios, or comparisons of how much of your gross income will be taken up by the mortgage, and how much of…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 04/01/2011

The biggest report for the month, the Bureau of Labor Statistics monthly unemployment report, was released on Friday, and the news was basically good. There were 216,000 new jobs created in March, and the unemployment rate (which is determined by a different survey) declined to 8.8%. This is obviously good news for the economy, and job growth is now consistently coming in above the break even line (it takes about 125,000 new jobs each month to absorb the new entrants to the job market each month). But the growth is still slow and the number of long term unemployed increased for the month. With 7.25 million fewer payroll jobs now than before the recession started in 2007, and 13.5 million Americans currently unemployed, the situation is getting better, but real growth is needed to make an impact on these numbers. In housing news, the Case Schiller 20-city housing price index…

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