If you’ve been paying attention to the news, you know that the real estate market is tough. Homes are taking longer to sell and selling for much less that they would have just a year or two ago. Many of the Realtors I speak with are still making their adjustments to the new market and trying to find new ways to generate a paycheck. I met with one Realtor last week who offered me the chance to get in on the ground floor of a multi-level marketing program he was considering. But the market isn’t bad for everyone. As two news stories from last week show, with a little bit of luck and ingenuity real estate is still a winner.

Flipping houses for a profit is harder to do than it was in the past, but Donald Trump managed to eke out some coin when he sold a Palm Beach property, Maison de l’Amitié, for a reported $95,000,000. Trump had been bragging that the sale was for $100 million, but according to the Palm Beach Post last minute negotiations brought the price down when Trump agreed to pay the closing costs (seller concessions work, even at the top price range). The buyer was a Russian billionaire and the price he paid was the highest sale price for a single family home in the United States (though I’m sure a few families could comfortably live there). Trump bought the home for a little over $41 million in 2004. Not a bad profit. As Trump himself told reporters, "I love breaking records, and this is a record. In an age of so many people getting hurt in real estate, it shows that you can still do well in real estate.” I’m not sure what the moral is here, that the rich get richer, or that if you are selling your home you might want to let some Russian billionaires know about it.

The other story was much closer to home, in Lake Bluff, Illinois. This story concerns another real estate developer, George Michael, who was intent on finding ways to lower the costs on his property. One of the biggest costs associated with real estate is real estate taxes. According to the Chicago Tribune, Mr. Michael creatively decided to reduce his expenses by cutting his tax bill to zero. He did this by converting his $3 million dollar lakefront mansion into a church for a tax savings of $80,000 per year. The church, the Armenian Church of Lake Bluff, isn’t open to just anyone. There are no trespassing signs posted throughout the property and it is mostly family members in the congregation. His plan might not work long term, though. The village of Lake Bluff is saying the church failed to get proper permits and had no authority to change his home into a church. This one may end up in court.

Illinois Mortgage Rates and News

I just finished off my last minute shopping at the mall. My family get together’s were earlier, so this was just getting some odds and ends for the kids. I hate shopping, and I do tend to procrastinate so it’s not unusual for me to be out on Christmas Eve. What was unusual was the state of the mall. I usually need to park in the back reaches, a long hike from the stores. This year I parked close and had my choice of open spaces. The stores seemed less crowded inside, too. There was no wait at the registers and I was in and out of the stores in record time.

The part of Illinois I live in, Dupage County, is fairly well to do, so I can’t imagine that this is a direct reflection on the economy. People here may be concerned but it is not going to keep them from spending money at the holidays. More people may have done their shopping earlier this year, but the other times I was out it seemed the same.

Could the Internet be the difference? I know that I do more and more of my shopping on line. This way I can avoid the crowds, traffic and general hassle. The weather has been more winter like here in Illinois than it has in recent years, so that may be another factor for keeping people inside.

I am interested in seeing how the retail numbers do come out. The predictions were that this would be a slower Christmas shopping season, but the November numbers were higher than expected. Consumer confidence is down and credit is tapped out for many, so we will see if the December numbers follow this trend. How the sales turn out will help determine the trend in mortgage interest rates into the new year. If sales are slower than expected, that will be one more sign that the economy is slowing. This makes it more likely that mortgage rates will fall. If the retail numbers are better than expected, it means the economy is still strong, and rates will likely rise.

We will be hearing more soon, and when we do, I will post my take on what is going on and how it affects Illinois mortgage rates and your mortgage experience. I wish you all a Merry Christmas and a happy and joyous holiday season.

Illinois Mortgage Rates and News

Fed Chairman Ben Bernanke announced today that the Federal Reserve Bank will take steps to protect consumers from predatory loans by closing the barn door now that all the cows are already out. This does leave the possibility that if the cows do return they will be stuck outside and not able to get back into the barn, but Chairman Bernanke is a strong supporter of the better late than never school of philosophy.

In a related story, former Fed Chairman Alan Greenspan continued his book tour with an appearance on the Today show. He announced that the slowdown in the real estate market was a big concern and the low interest rates set during his time at the Fed may have contributed to the bubble. He also acknowledged that his endorsement of adjustable rate mortgages and non-traditional types of financing may have made it worse. While the problem we have may have come about due to decisions made on his watch, he assured the host that it certainly wasn’t his fault.

In a side note, former Chairman Greenspan claimed that a major problem in our nation is the failure of people to take personal responsibility for their actions.

Illinois Mortgage Rates and News

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It’s no surprise that some Major League Baseball players used performance enhancing drugs. Anyone who saw the way that Barry Bonds looked when he first came into the league, and then saw the cartoon character he became later, knows he was juicing. The same thing goes for Sammy Sosa and a host of others. Today the Mitchell Report, a congressional investigation on the use of steroids in baseball, was released and it named 80 players who used steroids, human growth hormone or other banned substances. (Sammy Sosa wasn’t listed, but this has to be an over sight.) The list of players included the full range from Hall of Fame bound superstars like Roger Clemons, all the way down to utility players who wouldn’t make the cut on your fantasy baseball team.

Some of the names might be a surprise, but any casual fan knows that baseball has been crooked for years. You knew it back in 1998 when Mark Maguire hit 70 home runs and Sosa hit 66, both beating Roger Marris’ record of 61. When home run records which stood unbroken for years suddenly are falling like autumn leaves you know that something has changed. At first there was talk about how the ball was juiced, or the modern players had a better training regimen, but everyone knew the real reason for such a huge increase in production.

As all this was going on, MBL did its best to ignore it. Life was good, fans were filling the bleachers and profits from merchandising were at an all time high. Let the good times roll. The players didn’t stop it. Competition at this level is tremendous and a baseball player’s career is short. If they can gain an edge by taking a pill or getting a shot, many players will do it. The media raised the issue of doping, but it also built up the players to larger than life size. That was the way to get the ratings up. Fans didn’t complain much either. No one did.

Now that the extent of the problem is out in the open, it is impossible to ignore. This wasn’t a problem with a few big name stars, this was a problem throughout the game. Cheating was normal. Now it will take years to clean up the game and rebuild the reputation of America’s pastime.

Sounds like the real estate market, doesn’t it? Like steroids, cheap money and loose underwriting drove property values ever higher. Home ownership rates hit new records. Real estate was the hot topic and it was a good time to be a Realtor, mortgage broker, appraiser or anyone connected with the industry. Everyone is pointing fingers for who is to blame now, but while it was going strong, no one complained. And like with baseball, we will be cleaning up these problems and rebuilding our reputation for a long time to come.

Illinois Mortgage Rates and News

As expected, the Fed cut both the Discount and Fed Funds rate by .25% today. The big hitters on Wall Street were hoping for a half a point cut, so stocks took a dive as soon as the news was announced. The cut in the discount rate will mean that banks will lower the Prime Rate by .25%. So this cut will give consumers with home equity loans and some credit cards immediate relief.

How will this affect mortgage rates? The Fed can only change short term rates. Mortgage rates change based on activity in the mortgage backed securities market. Rates there have been extremely volatile over the last week, going from a 2 year low early last week, then jumping nearly 3/8ths of a point higher over the last several days. Usually mortgage bonds sell off before the Fed meets. Today they started strong and got stronger after the Fed announcement. This means that mortgage rates are better today and will probably go lower in the days ahead.

But don’t expect this to last. We are on a roller coaster, and there will be more ups, downs and sharp curves ahead.

Illinois mortgage Rates and News.

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With rates having dropped, I’ve been on the phone a lot lately calling past clients and letting them know that with the lower rates they had a chance to save some money. One of my calls was to a client I’ve known for years. I helped him with his mortgage when he first moved to the Chicago area, I helped him refinance a few times since then and another mortgage when his family moved to a new home. We talked some and I told him about the rates and why this was a good time to lock in to a lower rate.

His answer surprised me. Based on the news he’d heard, he didn’t want to go through all the bother of a refinance. He was under the impression that he might not qualify for a loan, and that banks weren’t lending much money now anyways. This, mind you, was from an A+ borrower, a dream client. He makes great money, carries little debt, has top credit scores and a ton of equity in his home.

I think this says a lot about perceptions and how they can affect the market. When things were riding high the perception was that everyone could own their dream house. I’m pretty sure I got a few calls from hobos who were ready to settle down and buy their McMansion. Now the market has shifted and fear is the dominant emotion.

Times are tight, but lenders are in the business to make money, and they do this by making new mortgages. The guidelines have changed and the underwriters may be a little more careful than they were before, but a good borrower is always going to be able to get a loan. I don’t see that changing anytime soon.

After a year that was more naughty than nice, Santa dropped in early for the real estate and mortgage industry. Mortgage rates fell to their lowest point in the last few years today.

It’s been quite a while since we were quoting rates below six percent and my office nearly buzzed with activity. Phones were ringing, people talked and laughed and it felt down right festive. It’s easier to be in a holiday mood when there is a prospect of a paycheck after Christmas.

Here in Illinois we had our first big snow today, too. Christmas lights are up around the neighborhoods and with the new snow it looks like something you’d see on a calendar.

If you are in need of financing, Christmas came early for you, too. If you bought over the last few years, chances are your rate now is higher, and it may make sense to refinance. If you have a home equity loan with a balance, or credit card debts you would like to pay down, it might make sense to refinance. If you have an adjustable rate mortgage that will be re adjusting soon, or if you have an option a.r.m, it really might make sense to refinance.

Rates are low now, but the experts are divided over which way rates will go. One school of thought is that the economy is weak and the Fed will need to continue to lower the discount rate and this will drive mortgage interest rates ever lower. The other way to look at it is that the Fed will lower the rates, but this will spur on inflation and weaken the dollar, which mean that mortgage rates have to move up.

Mortgage rates may get better, or they may get worse. But they are a bargain now. My thinking here at Illinois Mortgage Rates and News, is that this is a great time to lock in and and take advantage of where we are now, before our gift turns to coal.

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Today’s Chicago Tribune points to a new web site, cardit.com, which allows consumers to pay their mortgage payment with a credit card. Cardit is set up with 100 lenders including the nations largest loan servicers. It charges a fee of $19.95 plus 2.49% of the mortgage payment every time someone uses the service.

Paying your 7% mortgage with an 18% credit card doesn’t seem like the best way to get ahead. In fact, if the only way to make your mortgage payment is by adding it on to your credit card, you are probably already in a world of trouble. Delaying a problem isn’t the same as solving it. When the time comes that you need to pay your credit card and you don’t have the cash for that, the local loan shark is not a good option either.

My take here at Illinois Mortgage Rates and News is that the timing for this service couldn’t be worse. At a time when property values are soft and foreclosures are spiking this is like throwing more gas on the fire.

The web is currently home to about 110 million blogs. About 120,000 new weblogs are created every day, and each day there are about 1,500,000 new blog posts. That is  a lot of information flowing out in cyber-space. With so many blogs, and so much competition, how can anyone stand out?

Starting a new blog has to be a sign of vanity. What can I possibly say that hasn’t been said before, and better? Even in my niche, mortgages and real estate, there are thousands of blogs and many excellent bloggers who write with authority and insight. What can I bring to the party that will add value and further the conversation?

It may be vanity, but with someone as good looking and smart as me, vanity comes with the territory. That’s a joke. Mostly. Just as every one of the 6 billion humans on our planet are unique in some way, each blogger brings their own life experience and perspective.

I’ve been in the mortgage business since 1992, so I’ve seen a lot of changes and formed a lot of opinions. I’ve also had the opportunity to help a whole lot of people buy their homes and improve their finances.

I focus on education and communication, letting potential borrowers know exactly what their options are, how the mortgage process works and helping them find the best solution for their needs. It seem to me that a blog is just a bigger platform (I hope) for education and communication. 

I live in the Chicago area, so I concentrate on helping people with their mortgages in Chicago, the Chicago suburbs and throughout Illinois. As time goes on I plan to talk about the issues that are important to people in my area, but I hope to add value to anyone who is interested in mortgages or real estate.

So whether you are a first time home buyer searching for information on first time home buyer programs, or someone who wants to know the best way to shop for a loan, I hope you come back and join the conversation. Illinois Mortgage Rates and News is on the air!