Living in Lincoln Park Blog

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

Are you currently in the process of buying a home or refinancing?  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
• 15-30 Days: I recommend LOCKING unless your risk tolerance allows some substantial risk
• 30 or more days: I recommend FLOATING, but LOCKING immediately on any improvements

The week that was:

Well, the time as has come to come to the realization that the best rates for Fannie Mae and Freddie Mac conforming loans may be behind us.  The last week brought substantial volatility and, although we did see some small periods of favorable movement, the news was generally bad.  Counter to many rate watchers expectations, the Fed’s move to buy up Treasury Bills has not had the expected impact.  This is chiefly because the buying has been in the shorter term T-bills as opposed to the 10-year, which drives mortgage rates.  Additionally, the amazing rates we saw several weeks back were the result of a market which was significantly over-bought.  With the surplus of investment unsustainable, the rate increase we have experienced was only a matter of time as investment moved back to stocks.

The good news, if you procrastinated, is that the market is now generally believed to be over-sold as investors clammered to dump their investment.  Correction may present rate watchers with some short opportunities to secure a rate better than the current market offerings.  Additionally, we may see some negative economic data as foreclosures resume after the hiatus resulting from the robo-signing debacle.  Also, the specter of continued economic woes in Europe may tip the scales back in the favor of the bond market and better rates.  Whether this will be enough to offset a continued rally in employment and earnings news is yet to be resolved.

The best advice that I can give is to act.  Procrastination will cost you as the much desired bottom of the market is, and will be, a trailing indicator.  In short, we will not know where the bottom is until it has passed.  It will be nearly impossible to time a transaction, especially the purchase of a new home, to secure the absolute bottom.  Couple this with the reality that the bottom of the mortgage rate market and the real estate market, which will also be a trailing indicator, will not coincide means that the waiting game is a fool’s folly.  There are currently great rates still to be had with National averages tracking ~0.25% above the bottom.  Historically, you cannot do much better.

30 YEAR FIXED

National Average Rate: 4.39%

Fees/Points: 0.9

15 YEAR FIXED

National Average Rate: 3.76%

Fees/Points: 0.7

Source: Freddie Mac

Are you currently in the process of buying a home or refinancing?  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, but keep your finger on the trigger to LOCK if rates drop
• 15-30 Days: I recommend FLOATING
• 30 or more days: I recommend FLOATING

The week that was:

This week started with an alarming increase in Fannie Mae and Freddie Mac conforming loans.  This eased, however, when further information on the planned schedule for purchase of Treasury Bills was released by the Fed.  As bargain hunters moved into the bond market, pricing for mortgages moved back into the low end of the spectrum.  This provides further evidence that rate watchers may see a benefit for the Quantitative Easing planned over the coming months.

In  the general economy, there were some bright spots.  Foreclosures dropped by around 9%, but this was mostly driven by the moratorium on banks seizing properties resulting from the hullabaloo around robo-signing.  It can, therefore, be surmised that foreclosure rates will return to previous levels in coming reports.  Employment was a bright spot, with first time claims for unemployment benefits once again dropping.  This is especially encouraging as it marks a trend of improvement.  It is widely believed that we may be on the precipice of stronger overall recovery as companies have exhausted their ability to depend on increased productivity and temporary workers to fill their needs.

30 YEAR FIXED

National Average Rate: 4.17%

Fees/Points: 0.8

15 YEAR FIXED

National Average Rate: 3.57%

Fees/Points: 0.8

Source: Freddie Mac

Are you currently in the process of buying a home or refinancing?  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, but you should LOCK on low points in this volatile market
• 15-30 Days: I recommend FLOATING
• 30 or more days: I recommend FLOATING

The week that was:

Strap on your seat belts if you are in the process of or considering a Chicago real estate transaction as things just got a bit more interesting.  On Wednesday, the Fed announced their plan to purchase $600 billion in Treasury bills in an effort to jump start the economy.  This process, called Quantitative Easing, should, if all goes as planned, increase the money supply and lower interest rates.  Although this did initially receive a mixed response, rates for Fannie Mae and Freddie Mac loans dropped by the end of the week.

30 YEAR FIXED

National Average Rate: 4.24%

Fees/Points: 0.8

15 YEAR FIXED

National Average Rate: 3.63%

Fees/Points: 0.7

Source: Freddie Mac

Are you currently in the process of buying a home or refinancing?  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 very cautious FLOATING, but LOCK on any rallies in the bond markets
• 30 or more days: I recommend FLOATING

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

Wednesday

• MBA Mortgage Weekly Application Report
• September ADP Employment

Thursday

• Weekly Jobless Claims
• August Consumer Credit

Friday

• September Employment
• August Wholesale Data

Are you currently in the process of buying a home or refinancing?  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 very cautious FLOATING, but LOCK on any rallies in the bond markets
• 30 or more days: I recommend FLOATING

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

Monday

• 2-Year Treasury Auction

Tuesday

• Case/Shiller Home Price Index
• September Consumer Confidence
• 5-Year Treasury Auction

• MBA Mortgage Weekly Application Report
• 7-Year Treasury Auction

Thursday

• Weekly Jobless Claims

Friday

• August Personal Spending and Income Index
• University of Michigan Consumer Sentiment Index
• August Construction Spending
• September Auto and Truck Sales

Short-sales are a huge problem in the real estate and lending marketplace today.  The current cumbersome process is long and fraught with red tape.  Often times offers on the part of interested buyers can take months to receive a decision which hurts all parties and, in turn, bogs down the market.  Luckily, common sense seems to be prevailing with H.R. 6133 beginning its move through Congress.  This bill, sponsored by Robert Andrews (D-NJ) and Thomas Rooney (R-FL) requires banks to make a decision within 45 days.  This requirement would do wonders to reduce the log jam that is the current short-sale process.  I highly encourage everyone who feels that this would be an improvement to contact their Representative and/or Senator to voice their support for this legislation.

Are you currently in the process of buying a home or refinancing?  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 FLOATING, but LOCK on any rallies in the bond markets
• 30 or more days: I recommend FLOATING

The week ahead

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

• Tuesday
  • August Retail Sales Report
  • July Business Inventories
• Wednesday
  • August Industrial Production
• Thursday
  • Weekly Jobless Claims
  • August Producer Price Index
• Friday
  • August Consumer Price Index
  • University of Michigan/Reuters Consumer Sentiment Report

Click here for more information or to discuss your real estate deal in greater detail

Are you currently in the process of buying a home or refinancing?  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, as rates are not likely to improve before close
• 15-30 Days: I recommend FLOATING, but be vigilant to potential LOCK opportunities
• 30 or more days: I recommend FLOATING

The week that was:

Rates this followed the recent see-saw trend.  Initially we saw a drop on the heels of  a successful auction of Treasury Bills.  This momentum, however, slowed in the wake of favorable data on unemployement and a reduced trade deficit.  While promising, these variables are not necessarily pointing to a sustained recovery, so there are still likely good rates to be had. 

30 YEAR FIXED

National Average Rate: 4.35%

Fees/Points: 0.7

15 YEAR FIXED

National Average Rate: 3.83%

Fees/Points: 0.6