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 ready to buy. Homes were selling fast and multiple offers to buy the home were common. Back then, the most attractive homes in the nicer neighborhoods were getting the most interest and generating bidding wars, but nearly everything was selling.

The real estate market today is much different. The average time for a home to sell is much longer, and the focus of buyers now is not necessarily finding the best home in the nicest neighborhood, but finding the best bargain. The properties that are generating multiple offers today are homes that are priced below other similar homes. A lot of times this is a strategy on the listing Realtor’s part to separate their listing from all the others on the market and create an auction atmosphere. By starting out low they can often get more interest from buyers, more bids and with the competition to buy the home can often sell faster and for more than it would otherwise.

If you find a home that is getting a lot of interest and it looks like you will be competing with other buyers, here are some things to think about and tips on how to make the best of the situation:

Is it a short sale, or a foreclosure? These properties are most likely distressed, but there is a big difference between a short sale and a foreclosure. With a foreclosure the bank already owns the home and has agreed to sell at the listing price. A short sale is more complicated. Another way to look at short sales is as pre-foreclosures. The owner is trying to get out of the home and sell it for less than what they owe on the mortgage. This means you have to go through two steps – getting a contract together with the owner, and then having the contract approved by the bank that holds the mortgage. Sometimes short sales are priced too low, and at a point where the bank won’t approve it.

Is this really the right house for you? A funny thing happens when people get involved in a bidding war. Emotion takes over and many buyers are determined to do whatever they can to make the winning bid. If this is the right home for you and the value is there, that can be the right decision. But if you get carried away in the moment and agree to terms that are more than you want, you may regret it when the seller says yes. As the intensity heats up, take a step back and make sure that this is the right home for you.

Have your Realtor put together a market analysis for the home. The property has to be priced well in order to generate excitement, but as buyers compete the asking price may rise significantly above what you start out at. With multiple offers the first bid is often followed by a request that all the bidders come in with their highest and best offer. If you are intent on winning the bidding contest, you may end up paying more than you expected. A good Realtor will help you see what the real value of the home is and what the best strategy is for you to buy, and help you make a decision of if it is better to walk away.

Homes that generate multiple bids are a good sign for the market, but this is still a buyer’s market. As a home buyer you have a lot to choose from. Make sure that the home you buy is the right one for you.

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

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 mortgage debt obligations as AAA which led up to the crash in the housing market. But the simple threat made it official. At the announcement stocks dropped sharply and bonds dropped but quickly recovered. The stock market had also fully recovered by the end of the week.

The news that bonds may be downgraded should have been devastating, but just the fact that this fear is now out in the open has changed the direction of the debate. The idea is that it is now more likely that the Republicans and Democrats will come to some kind of agreement because the cost of not doing so is too high. It is hard to see anything meaningful happening before the 2012 election, as each party has already staked out their strategy on how they will get the debt level back in line. Spending cuts by themselves won’t do it, and tax increase will be necessary at some point the question is when. One big part of getting government revenues up is getting the economy growing again. More jobs means more money in the government coffers. Some fear that tightening too much now will slow the economy further, meaning another slide downward.

In reports released last week, existing home sales rose 3.7%. The inventory of unsold homes on the market is now at an 8.4-month supply at the current sales pace. Retail sales rose 0.3% for the week, in line with expectations. The index of leading economic indicators, a forecast of economic activity in the next three to six months, rose 0.4% in March. The Housing Pulse Distressed Property Index (DPI), a key indicator of the health of the U.S. housing market, shows that in March, almost half of the housing market is now made up of distressed properties, either short sales or foreclosures. In order for the housing market to recover, the lenders need to deal with their backlog of distressed properties.

The Fed Open Market Committee will meet on Tuesday and Wednesday of this week. No one expects them to raise rates any time soon, but their statements are always closely examined for changes in wording and any hidden meanings. The big question now is what their plans will be for the ending of quantitative easing (QE2). This program was initiated to stimulate growth by putting more money into the economy. Rates have actually increased since this policy started, and many worry that inflation has already taken hold. Whatever they say, expect the markets to react sharply to any change in the script.

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, including credit scores, property type, amount of down payment and a number of other factors. 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

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 in the middle and find agreement. There is no middle because they are on completely different tracks, and see economics as if they are in alternate universes. This is surely going to be one of the big battles over the next 2 years as the election heats up. But the good news for the market is that now everyone is acknowledging that we have a problem, and that spending and revenue have to get back in line, somehow. Just the fact that both sides now see this as a priority is helping to take some pressure off the bond market, which helped mortgage rates to improve this week.

The economy is gradually improving. The number of job openings in February was the highest level since 2008. Inflation is still low. The core Consumer Price Index (CPI) came in at an annualized rate of  1.6% in March, down from 2.4% in February. Though gas and commodity prices have shot through the roof, there are signs that the rate of increase is slowing. Several Fed members gave speeches last week saying that it was much too soon to give any consideration to raising rates this year.

The housing market is heating up. The combination of low mortgage rates and low home prices is getting buyers off the fence and moving forward. This is anecdotal, but I am seeing more purchase contracts come together now than I did at this time last year when the home buyer tax credit was still in place. Most of the activity is still with first time home buyers. They have a big advantage having nothing to sell, and as rents increase they can see the opportunity as the move up to home ownership is less of a jump in payment than any time in recent years. For the first time in the last two years, I am also seeing an increase in move-up buyers. The big problem for most move up buyers is that they have to sell their home first, or be able to qualify to buy with both mortgage payments. It is a hard decision to sell your home for much less than what it was worth before. Those without equity or cash reserves are stuck, but for those with the means, many are biting the bullet on the sale and taking advantage of the market now.

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, including credit scores, property type, amount of down payment and a number of other factors. 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

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. A big part of the reason the budget is out of whack is not just that we have been spending too much, but also that we aren’t bringing in enough revenue in taxes. This is partly a function of high unemployment, if workers aren’t working they aren’t able to pay taxes. But if we were serious about this, we would be looking at both sides of the problem and figuring what we could cut while maintaining the services we need most and how we can bring in more income at the same time. If we really want to solve our problems (and eventually we will have to) this will require hard decisions. For now, both parties make a lot of noise but kick the can further down the road.

The biggest worry in the markets now is the threat of inflation. The price of oil, steel, gold and a whole range of different commodities have spiked over the last year. Prices at the supermarket are moving higher and manufacturers are passing along cost increases. All of this is an upshot of the Fed’s quantitative easing policy. This policy has also helped the stock market extend its rally, even as the volume of shares traded is low. The markets are worried about inflation taking hold and the Fed reacting too slowly to contain it. This wouldn’t normally be a concern at a time when unemployment is still high, and the economic recovery is still fragile. Our housing market is still soft and consumer confidence is still weak. In an interview last week, Fed Chairman Bernanke said that the signs of inflation were transitory, and not likely to take hold in this environment. There is some evidence that the spike in commodity prices has been driven by speculation, which supports Bernanke’s view. If incomes are down, this should keep a lid on inflation, but a lot of this will depend on the Fed’s future plans.

The Fed’s quantitative easing program is due to expire in the next few months, and there is a lot of investor pushback on their extending the program beyond this point. Mortgage rates, though still low, have gone up nearly a full point since this last round of quantitative easing. The markets are nervous about what happens once the stimulus to the economy is taken away, and what the Fed will do at that time. Mortgage rates for the week are about the same as they were at the end of last week. Rates are still near historic lows, and affordability is high. If you are thinking about buying a home, don’t wait for lower rates, they may be as good as it gets now. 

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, including credit scores, property type, amount of down payment and a number of other factors. 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

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

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 your income it will take to pay off the mortgage and all your other debts.

If I can help in any way, please let me know.

Other videos in this series -

Credit Qualifying and What You Can Do to Improve Your Credit Scores

Pre-Qualification and Mortgage Pre-Approval

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

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 fell 1% in January, down 3.1% from the previous year. Here in Chicago, prices, based on this index, are down 31% from their peak. With low home prices and low mortgage rates, home affordability is at the best level in this decade. In order for the economy to move up to the next level, there has to be a true housing recovery. Whether this really happens depends on a number of factors. One of the biggest is fear. There are a lot of people who would traditionally be home buyers now, but are sitting on the sidelines while they wait to see if home prices dip even lower. There is a lot of foreclosure inventory on the market, and it is possible that prices will continue to drop. But in the longer run, stabilization may be closer than many people think. Fortune Magazine recently ran a headline story saying that buying a home may be the best investment alternative available today. The author ran a story saying that homes were a bubble back in 2004 (which was correct, but early), and the reasoning makes a lot of sense to me. One of the key factors is that home construction is nearly at a standstill. Also, rent prices keep increasing making owning your own home more affordable. Whether this happens sooner, or later, the market will eventually recover. If you are debating about continuing to rent or taking the plunge into home ownership, it is worth exploring all your options.

Mortgage rates ended a volatile week in the same range as where they started. There is no clear trend in the market, and rates could break either higher, or lower. Either way, mortgage rates are still near all time lows and mortgage money is readily available.

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, including credit scores, property type, amount of down payment and a number of other factors. 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