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March 7th, 2011

Oil woes keep low mortgage rates alive, but bearish mortgage market may be around the corner

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:

  • 5-15Days: I recommend LOCKING
  • 15 + Days: I recommend FLOATING

It is important now to realize that although rates are down, markets can turn bearish very quickly.  Fence-sitters should decide soon on their course of action or risk higher rates .  Economic data that can affect mortgage interest rates.

Monday

  • January Consumer Credit

Tuesday

  • $32 Billion 3-year Treasury Auction

Wednesday

  • MBA Weekly Mortgage Applications
  • January Wholesale Inventories
  • $21 Billion 10-year Treasury Auction

Thursday

  • Weekly Jobless Claims
  • January Trade Deficit
  • $13 Billion 30-year Treasury Auction
  • February Treasury Budget

Friday

  • February Retail Sales
  • University of Michigan Sentiment
  • Business Inventories
February 7th, 2011

Rates likely to continue upward trend in the week ahead

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 LOCKING
  • 15 + Days: I recommend LOCKING

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

Monday

  • December Consumer Credit

Tuesday

  • $32 Billion 3-year Treasury Auction

Wednesday

  • MBA Weekly Mortgage Applications
  • $24 Billion 10-year Treasury Auction

Thursday

  • Weekly Jobless Claims
  • December Wholesale Inventories
  • $16 Billion 30-year Treasury Auction
  • January Treasury Budget

Friday

  • December Trade Balance
  • University of Michigan Mid-Month Consumer Sentiment
February 5th, 2011

Rates rise in the wake of jobs data

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: LOCK
  • 7-15 Days: LOCK
  • 15-30 Days: LOCK
  • 30 or more days: LOCK

The week that was:

This week unfolded a bit unexpectedly.  Egypt exploded in riots and Yemen followed suit.  The accompanying jump in oil prices coupled with uncertainty that this brought to world markets should have staved off the recent upward pressure on rates, but this was not to be.  A mix of favorable earnings and positive jobs data pushed the Dow over 12,000.  The dragged pricing for Fannie Mae and Freddie Mac mortgage pricing up with it.  The big day is Friday when official employment data hits the street.  This will either be a boom or bust for mortgage rates.

30 YEAR FIXED

National Average Rate: 4.81%

Fees/Points: 0.8

15 YEAR FIXED

National Average Rate: 4.08%

Fees/Points: 0.8

Source: Freddie Mac

January 28th, 2011

Mortgage rates start the week in negative territory but likely to improve on unrest in Egypt

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 or more days: I would suggest FLOATING with extreme caution.  With this much volatility, I would LOCK on any improvements as well as any major upward repricing.

The week that was:

This week could have been disastrous for ratewatchers as there was a lot of economic data, some T-Bill auctions and a bunch of corporate earnings reports.  In addition, this was the week of President Obama’s State of the Union address and the release of the FOMC policy.  While we did see and uptick in mortgage pricing after the government’s input, it could have been much worse.  Although received favorably, President Obama’s remarks did not signal any great revelations and the continued stress on “investment” in the economy sent a signal of greater debt.  As far as the FOMC was concerned, there was a definitive signal that there could be continuance of the quantitative easing strategy as well as a belief on their part that the economy is generally improving.  Coupled with some positive earnings reports, this news was enough to send the Dow over 12,000.  Subsequently, the price of Fannie Mae and Freddie Mac conforming loans saw an increase.

All of this changed Friday as unrest in Egypt sent investors running.  The ensuing flight to quality reversed the trend in mortgage pricing for the better.  Although many lenders have not repriced the trend is that this will likely occur.  I would recommend that everyone with loans in process closely monitor the market and keep in close touch with their bankers to ensure they take best advantage of the situation.

30 YEAR FIXED

National Average Rate: 4.80%

Fees/Points: 0.7

15 YEAR FIXED

National Average Rate: 4.09%

Fees/Points: 0.7

Source: Freddie Mac

January 25th, 2011

Short trading week marked by mortgage rate do si do

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 or more days: I would suggest FLOATING with extreme caution.  With this much volatility, I would LOCK on any improvements as well as any major upward repricing.  You do not want to miss the boat.

The week that was:

A bit of dancing this week as rates dropped a bit early on and returned recent levels by Thursday.  The impetus for the drop was light trading on Monday and continued rebound from the week prior.  Procrastinators, however, were punished as the equities market reacted favorably to an increase in the sale of existing homes and continued recovery in employment with a decrease in the 4 week moving average of new jobless claims.  All in all, we found ourselves back where we started.

30 YEAR FIXED

National Average Rate: 4.74%

Fees/Points: 0.8

15 YEAR FIXED

National Average Rate: 4.05%

Fees/Points: 0.8

Source: Freddie Mac

January 19th, 2011

Touch and go week ahead for mortgage rates

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, unless low risk tolerance.
  • 15 + Days: I recommend cautionary FLOATING

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

Wednesday

  • MBA Weekly Mortgage Applications
  • December Housing Starts
  • December Building Permits

Thursday

  • Weekly Jobless Claims
  • December Existing Home Sales
  • December Leading Economic Indicators
  • January Philadelphia Fed Business Index
January 19th, 2011

Are there still low down payment mortgage options available?

I received an interesting question the other day which I felt warranted a post as it is one that I am getting more frequently these days.

Question: Can I still get an 80/15, 30yr fixed mortgage loan with no Mortgage Insurance (MI) and no escrow account?

Answer:  Solutions like this are few and far between these days. There are some second lenders who can get you to 90%, but a 95% loan to value is rare indeed. I would ask you “what’s your aversion is to mortgage insurance?” as it may be your only option for a conventional loan up to 95%. It is often tax deductible and actually provides less risk, as your second loan would likely be a Home Equity Line tied to the prime rate. This could cost you a lot if rates spike. I recommend that you look at single premium MI which would actually bear an upfront cost with no monthly mortgage insurance cost. You could possibly even negotiate a deal where the seller pays this.

Be careful about working under old paradigms. It seems as if you may not have explored all of your options due to an inherent aversion to MI.

December 10th, 2010

Mortgage rates jump to new highs

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

December 7th, 2010

The Art of the Down Payment Gift for Chicago Real Estate

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 31st and the remainder gifted after December 31st.  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!

December 7th, 2010

Mortgage rates recover as markets corrects from oversold levels

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
Lincoln Park News

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