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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.

January 12th, 2011

Lincoln Park Real Estate Market Statistics

As the new year begins ramping up, nearly everyone I talk with wants to know “how is the Lincoln Park real estate market doing?” So I thought I’d go with the old adage that a picture is worth a thousand words and make some general comparison from there.

Click to enlarge

If you click on this picture, you’ll be able to see a larger, readable picture of the overall home sales in Lincoln Park for 2010. For a quick review, the average sales price for all single family homes was $1,643,119, condos were $425,224 and multi-units were $813,627.

Click to enlarge

If you click the next picture, you’ll see a larger, readable picture of the overall home sales in Lincoln Park for 2009. Again for your quick review, the average sales price for all single family homes in 2009 was $1,790,627, condos were $449,592 and multi-units were $770,871.

Here’s the bottom line numbers you’ve been waiting for: when comparing 2010 average sales over 2009, single family home prices are down 8%, condos are down 5.5% and multi-unit buildings are up 5.5%. Yes, you read that right, up 5.5%! Looks to me like investors are taking advantage of this market.

What does this mean to you? If you live in Lincoln Park, click on the picture and you can see how the sales were for your particular size of home. If you don’t live in Lincoln Park, contact me and I will happily send you the statistics for your neighborhood. Should you live outside of the Metro Chicago market place, let me know where you live and I will be happy to introduce you to one of the Realtors® from my national (or international!) network.

Whether it’s through getting a great deal on your primary residence or buying rental property, this is a market where where wealth is built! What are you doing to increase your future net worth?

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 9th, 2010

Chicago Real Estate Fence Sitters…Part III

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.

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
November 29th, 2010

Home Depot and Lowe’s Recognize Military Service With 10% Discount

I found out something interesting this weekend, which will be old news for some, but was new and lucrative to me.  In an effort to recognize military service both Home Depot and Lowe’s have generously extended a 10% discount to all purchases made by veterans.  To take advantage, a veteran needs to provide proof of service at the register at checkout and the discount is applied.  This can amount to a good amount of money on larger projects and purchases.

November 23rd, 2010

Helping Your Children Buy Lincoln Park Real Estate

I work with a very diverse group of clients. One group is parents either buying, or helping their kids purchase a condo in Lincoln Park. For those who are planning ahead, this time of year presents a unique opportunity to help your kids with their down payment.  And BONUS!…there is little or no tax implications to you!  Here’s how it works. You can give up to $13,000 per child (or up to $26,000 if given jointly with your spouse) without triggering the IRS gift tax.  Even though I’m not a CPA or tax attorney, this sounds like a pretty sweet deal if you are of the mind to help your children with a cash infusion!

Assuming you have not hit the maximum amount that you can gift, the real beauty to this timing is that you can max it out by the end of December 2010 & gift the full annual amount again in January 2011. So theoretically, a parent, with their spouse, can give their child up to $52,000 in a matter of a few months, which adds up to a pretty substantial sum of money that will surely help with your child’s down payment.  Talk about a Happy New Year!

And, according to the AXA Equitable site, “if you don’t feel comfortable with giving substantial gifts directly to your recipients, the IRS allows another avenue. You can, for example, pay someone’s college tuition or medical expenses on a gift tax-exempt basis — as long as you write the check directly to the institution. This is generally considered a qualified transfer with no dollar limits.” While this is not relevant to helping your kids buy a condo, there may be other benefits to family members.

So if you are looking to purchase a condo this spring for or with your kids, now is the time to start planning. And while you’re discussing the financial options over the holidays, you might want to begin searching for that perfect Lincoln Park condo.

Lincoln Park News

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