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. FHA is
also changing the monthly mortgage insurance, increasing it by .10% for loans
under $625,000 (which means everything but some 3 and 4 units here in the
Chicago area). The current factor is 1.15% of the loan amount (divided by 12),
the increase will make the factor 1.25% after April 1st. On that same $200,000
loan, this means a change in payment of about $16, so the two increases
combined will increase the cost for a buyer by about $23 per month. For loans
over $625,000, again, only multi-units here in the Chicago area, the monthly
premium will be increased by .35, to a total of 1.45% per year.

These increases aren’t enough enough to make a difference in qualifying for
most borrowers, and with mortgage rates as low as they are, the total payment
on an FHA purchase is still competitive with rents in many cases, and FHA
financing is still the best, and only, route for many borrowers. The reason
they are making this change is to shore up the reserve fund and keep FHA
solvent. While Fannie Mae and Freddie Mac have been bailed out by the federal
government, FHA has remained solvent, paying for losses out of their own funds.
Part of this was because FHA wasn’t a big factor during the housing bubble,
and the reserve fund has been sufficient to pay out all claims against it. But over
the last few years, FHA market share has risen from about 2% up to over 40%
currently, and the reserve fund has shrunk below the congressionally mandated
level. These increases are expected to raise over $1 billion through 2013, and
keep the program running without a federal bailout.

The other big change will cap the seller closing cost credit at 3% of the purchase
price, or $6,000, whichever is greater. The biggest obstacle to buying a home
is usually coming up with the money for the down payment and closing costs.
The FHA down payment is a minimum of 3.5%, but closing costs usually run
about $3,500 to $4,000, and more if there is a transfer tax involved. It is common in the market now, for the buyer to negotiate for the seller to pay the closing costs. They first proposed capping closing costs about a year ago. They didn’t go through with the change then because dropping the credit would hurt those who needed it the most, the lower and moderate income buyers. If you are buying a
home for $200,000, a 3% seller credit is $6,000, more than enough to pay for
all the normal closing costs. If you are buying a $60,000 home, that same 3% is
only $1,800, meaning buyers of smaller homes would need a lot more cash out
of their own pockets in order to close. The new rule caps the closing cost credit
at 3% of the sales price, or $6,000, whichever is greater. This means that the
buyers of lower priced homes can still buy without having to come up with a lot
more cash than they otherwise would. To me, this seems like a fair way to handle
this, and as it is rare to see a credit of more than $6,000, I don’t expect this will
have much of an effect on the market.

If you are looking to buy soon, and plan to use FHA financing, this might be a reason to
move a little faster. If you have any questions, or if I can help in any way, please let me know.

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

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 focus is back to what was going on in the US economy, and as a result, Mortgage rates have risen slightly.

A big part of the focus this past week, was on the stock market. The stock market has been bumping around the 13,000 level in the DOW index, going above it for the first time in 4 years, before closing slightly below the number for the week. This level is looked at as a resistance point for stocks, and if they go a little, higher, this will be taken as a sign that we are in a new bull market, and money will flow into stocks again. Theoretically, at least. The situation in Europe has been a damper, and last week worries about fuel costs going much higher have also curbed the excitement to a degree. But there are legitimate signs of optimism in the economy. The University of Michigan consumer sentiment survey rose to 75.3, beating expectations. This is important because consumer sentiment is a measure of whether consumers are in a buying mood, or not. First-time jobless claims remained in the  351,000 range, and the four week average hit it’s lowest level since March of 2008.  The trend to better employment numbers has been slow but steady. There was also good news on the housing front. Existing home sales improved in January, and new home sales, which have been absolutely dead for the last several years, have started to move higher, too. Part of this improvement has got to be weather related, and though more homes are selling, the prices are down from where they were a year ago. But this is an encouraging trend, and housing needs to get better before the economy can really stand on its own. The big question now will be what happens to housing inventory. The inventory of homes for sale has been moving steadily down over the last months. With strong demand and fading supply, home prices will eventually start to rise. The question is whether the big banks will start adding to the inventory again with their backlog of foreclosed properties.

Mortgage rates rose slightly last week, but are still near all time lows. The FED has been doing everything it can to keep mortgage rates low, and absent some major surprise, most experts expect we will stay in this affordable range. But, good news for the economy, optimism, is bad news for mortgage rates. On the other hand, bad news and fear are what drive rates lower. If the problems in Europe are really on hold (a big if), and if the stock market does make a move higher, though rates will still be in a low, low range, mortgage rates might start to climb a bit higher.

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 640 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

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 austerity program will tank the economy, and withdrawing from the EU will also tank the economy. Either path involves a lot of pain. The equity markets will respond favorably to this though ( bonds and mortgage rates will be pressured higher), as it buys the European Union a little more time to reshuffle and shore up their card walls. If Greece withdrew it was expected to start a chain reaction, but for now optimism is back, until the next act.

On the home front, the news continues to strengthen. Weekly claims for unemployment are now below 375,000, the lowest level since May of 2008, which is more evidence that companies are actually hiring again. Credit availability is also the highest it has been since the start of the credit crunch. If credit really is starting to thaw, that is good news for the economy as there can’t be a sustained recovery if the banks aren’t lending. The Fed’s declaration that they will be keeping rates at all time lows through the next 3 years has to be an incentive for banks to get their money out of their vaults and out earning interest. Consumer confidence ticked slightly lower, but this didn’t have much effect on the markets.

Mortgage bond yields ticked slightly higher last week, and we are now near the top end of the range. Still, mortgage rates have been amazingly stable recently, and even if we kick slightly higher, we are still at all time low rates. Barring a collapse in Europe, it is looking doubtful that rates will fall much lower than where they are now. The Fed is doing it’s best to keep rates low (operation Twist) so we aren’t likely to spike much higher, either. The risk is still on the side of caution. If you are looking to refinance your current mortgage, or buying a new home, it makes take advantage of these low rates 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 640 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

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 sign was the ISM service and manufacturing indexes which showed faster levels of expansion in January. Another sign of improvement came from auto sales which came in with their best month since the cash for clunkers incentive program back in 2008. Anecdotally, from talking with several business owners last week, their orders are up and there is more optimism in the air.

Mortgage rates were mostly flat to just slightly higher for the week, but that was after improving in the early part of the week and getting smashed at the end, after the release of the employment report. In other times, the reaction to this report would have been even more extreme, and sent rates much higher. This hasn’t happened, yet, mainly because there is so much uncertainty globally, and because we need more proof of growth here before seeing this as a true trend and not just an outlier of a report. There were signs of growth last year that only lasted a few months before fading again. The question now is if we will go sideways, or if a real reverse leading to higher rates is on the way. It’s probably no surprise that the answer to this may be based on what happens with Greece. Sunday night talks broke down inside the Greek government on what would be done to restructure their debt. Greek officials are now saying that they will not abide any more moves to austerity, which means a default may finally be at hand. New talks are planned for today, Monday, but if Greece continues down this path, and European officials don’t blink, this could set off fireworks. This may be a volatile week in the markets.

Property taxes came out in Cook county last week. This is good news for anyone who is scheduled to close a purchase or refinance there soon, as this means you won’t need to set up a TI account. A TI or Tax Indemnity account is when the title company, which handles the closing, requires an escrow of usually 1 and 1/2 times the last tax bill to be held back to make sure they are collecting enough taxes to account for any tax increases. Now, with the actual numbers out, this means a lot less cash will be needed at closing. This is the first time in the last several years that the tax bills have actually come out on time.

Here in Chicagoland, the combination of warm weather, low home prices and historically low mortgage rates, means the Spring real estate market has started early this year. Usually not much happens before the Super Bowl, so this is an early start. Home buyers are out in force and looking for bargains. Most of the sales are either distressed transactions, that is short sales or foreclosures, or recently flipped homes where an investor bought a home, did a rehab and put it back up for sale. This activity is probably not going to help the next tier of move up buyers who need to sell their home before buying another, but it will help reduce the inventory which is the crucial first step. There is still way too many distressed homes that are further back in the pipeline, so we still have a ways to go before we can say we are in a normal market again. But the fast start is encouraging and it is good to see home buyers realizing how affordable homes are, and that there is value in buying 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 640 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