February 2012

Big Changes Coming to FHA on April 1st – Mortgage Insurance Premiums are Going Up, Change is Seller Closing Cost Credit

Some big changes will be made to FHA loans starting April 1st, which will increase the cost of FHA financing, and change the way seller closing cost credits are structured. The first change is that FHA will increase the cost of both the monthly and up-front mortgage insurance. The other big change is capping the seller closing cost credit at 3% of the purchase price (currently it is at 6%), or a maximum of $6,000. Regarding the mortgage insurance change, FHA divides their mortgage insurance premium into two parts, an up-front premium that is usually added onto the mortgage balance and financed into the loan, and a monthly premium similar to conventional PMI. Starting on loans registered as of April 1st, the up- front premium will be increased from 1.0% to 1.75%. On a $200,000 loan, this means a change in payment of about $7 based on current interest rates….

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 02/24/2012

Over the last months, it seemed like Greece was the center of the financial universe, and not much else really mattered. But over the last week Greece was hardly a factor, with the new deal in place, and though neither side (the Greeks, and the the Germans and other countries holding the Greek debt) was very happy with the deal, it seemed that this was enough to keep the finger in the dyke to keep the flood at bay. It isn’t like anyone thinks that this agreement solves any of the problems with Greek debt, it just extends the horizon as to when Greece will default, so that it doesn’t have to be dealt with now. This view may be a bit premature, as Germany and Finland have to vote to okay the deal, and opposition is now rising in these countries. But for now, Europe is calm and the…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 02/10/2012

If I remember my humanities classes correctly, the Greeks invented Drama a long time ago. Over the generations they have gotten very good at it, and Greek drama continues to be the biggest mover in the financial markets today. The stock and bond markets whipsawed last week based on the latest details of whether there would be a Greek debt agreement, or not. At first there was, then it wasn’t really after all, then a few more reverses, then as of Sunday night, the Greek parliament passed the austerity agreements, so that they will be eligible for their next round of funding from the European Union. But don’t expect this to be the curtain closer. The deal has passed, but their is rioting in the streets and Greek elected officials are watching anxiously. The truth is, there are no good options for the Greeks, as going along with the forced…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 02/03/2012

Over the past months there have been steady signs that the economy was starting to build steam and improve. The employment report released on Friday is the best evidence of this view yet. The latest report showed an increase of 243,000 new jobs, and a drop in the unemployment rate to 8.3% from 8.5%. This was a solid showing, and more so because it handily beat expectations. Revisions to previous months also came in higher, so this was the most positive report we have seen in a long, long time. This is still just one report and there are still way too many people who are long time unemployed, there are still over 12 million Americans looking for jobs we have and a long way to go to make up for all the contraction in the economy over the last several years. But this is an optimistic sign. Another good…

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