Living in Lincoln Park Blog

Are you currently in the process of buying a Lincoln Park home or refinancing your Chicago mortgage?  Trying to decide when to lock can be a stressful and difficult decision.  In my job as a mortgage lender, I watch the markets daily to keep my clients abreast of changes to assist them in securing the best mortgage rate possible.  Please see my recommendations below.

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7-30 Days: I recommend LOCKING on any pricing improvements
• 30 or more days: I recommend FLOATING with extreme caution

The week that was:

This week was a bloodbath for mortgage rates.  This was primarily due to two major factors.  First and foremost, there has been a slew of economic news that favors investment in equities.  Specifically, Europe has, for the time being, begun the hard road to solving their tribulations with countries such as Ireland undertaking significant austerity measures.  In addition, U.S. lawmakers have favored a short-term approach which will keep lower taxes and extend unemployment benefits, which favors stocks over bounds for investors.  Secondly, deep rooted concerns about the long-term impact from excessive borrowing and the Fed move for Quantitative Easing have eroded the bounce back effect that we should have seen on employment and housing numbers.  In short, Treasuries and, in turn, the mortgage backed securities that drive rates cannot gain traction for a recovery.  In the end, the market may correct, but the rate improvement may be slight and hard to predict.

30 YEAR FIXED

National Average Rate: 4.61%

Fees/Points: 0.7

15 YEAR FIXED

National Average Rate: 3.96%

Fees/Points: 0.7

Source: Freddie Mac

Or, ‘6 Truths from the Chicago Real Estate Front’

So you’re still fence sitting…

Truth #1:  There currently exist ‘some of the best housing affordability conditions buyers have seen in their lifetimes – and perhaps even their parents’ lifetimes’.

Truth #2:  Even the worst housing slump since the Great Depression can’t remove the long-term benefits of home ownership, specifically, slowly and surely building a long-term forced savings plan.

Truth #3:  Mortgage rates are sitting near all-time lows, with 30-year, fixed mortgage rates are 4.875%, maximum conforming loan amount of $410,000 (quoted 7 December, 2010, RWF Mortgage)

Truth #4: Lower prices are making buying and owning more tempting… to everyone!  If you think that by fence sitting you are likely to snatch up that bargain…what do you suppose the other ‘fence sitter’ is thinking?  You guessed it.  You jumped in at the same time as another fence sitter and now that ‘bargain’ price that you’ve been waiting for has been artificially increased. By fence sitting for too long, you’ve created that perfect storm for the seller…the multiple offer!

Truth #5:  The combination of lower prices and cheap mortgage rates has made for the most favorable conditions for home buyers in years.

Finally, Great Truth #6:  All those headlines about the national housing market aren’t nearly as important as what’s going on in the area you are looking to buy into.  The trajectory of home prices will vary a great deal from one place to the next and Chicago Real Estate is rated #12 out of 20 metropolitan areas showing growth in housing prices.

We are passionate about what we do and would love to help you become a homeowner.  The sooner you get off the fence, the sooner you will enjoy all the delights and benefits of home ownership.

As approval requirements for loans in the mortgage market have tightened up, the requirement for a down payment has become significantly more important.  This has left many prospective Chicago home buyers out in the cold.  This reality has brought back into vogue the gift as a potential means of bolstering a purchaser’s assets.

A gift is direct financial assistance from an immediate family member for the purpose of purchasing Chicago real estate.  The amount of the gift is unlimited, but often times specific programs have minimum requirements for the actual borrowers to bring money to closing.  The donor simply needs to provide a signed gift letter, which provides verification of the amount and the source of the funds.

One major consideration that often complicates the gift process is the tax implications for the donor.  Generally, a $13,000 gift is allowable before taxes apply.  One method of maximizing the tax-free portion of the gift is breaking it up among family members.  An example of this scenario would be where each parent in a spousal couple would gift up to $13,000 to their child to a total amount of $26,000 without tax implications.

Another means of maximizing a gift without incurring taxes is to separate the gift between multiple years.  With a bit of planning, gifts in excessive of $13,000 can be broken down into multiple gifts with a portion gifted prior to the December 31^st and the remainder gifted after December 31^st.  Because of this, the end of the year becomes an opportune time for donors and their recipients as the time required for the separation is at a minimum.

So if helping your child purchase Chicago real estate is in your future, now is the time to start planning!

Are you currently in the process of buying a home or refinancing in Chicago or vicinity? Trying to decide when to lock can be a stressful and difficult decision. In my job as a mortgage lender, I watch the markets daily to keep my clients abreast of changes to assist them in securing the best mortgage rate possible. Please see my recommendations below.

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7-15 Days: I recommend FLOATING
• 15-30 Days: I recommend cautionary FLOATING
• 30 or more days: I recommend FLOATING, with a funger on the LOCK trigger

The week ahead for economic data that can affect mortgage interest rates:

Tuesday

• $32 Billion 3 Year Treasury Auction
• October Consumer Credit

Wednesday

• Weekly MBA Mortgage Applications
• $21 Billion 10 Year Treasury Auction

Thursday

• Weekly Jobless Claims
• October Wholesale Inventories
• $13 Billion 30 Year Treasury Auction

Friday

• October Trade Balance
• November Import and Export Prices
• University of Michigan Mid-Month Consumer Sentiment Report
• November Treasury Budget