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FHA loans to get a bit more expensive

February 15, 2011

HUD recently announced that they will once again be adding to the cost of FHA loans.  Specifically, borrowers can expect to see a 0.25% increase in monthly mortgage insurance premiums.  This move is primarily intended to aid HUD in meeting the mandated capital reserve requirements.

In real world terms, the impact on borrower’s payment will be less than $50 per month.  While this will not break the bank for the average homebuyer, this definitely supports the trend the slow steady trend of increased cost of borrowing.

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Mortgage rates once again begin the week flat

February 14, 2011

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.

  • Short-term – LOCK
  • Long-term – LOCK

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

Tuesday

  • Janurary Retail Sales
  • February New York Empire State Manufacturing Index
  • January Import and Export Prices
  • December Business Inventories
  • NAHB February Housing Market Index

Wednesday

  • MBA Weekly Mortgage Applications
  • January Housing Starts and Permits
  • January PPI
  • January Industrial Production
  • January Capacity Utilization
  • FOMC Meeting Minutes

Thursday

  • Weekly Jobless Claims
  • January CPI
  • January Leading Economic Indicators
  • Fed Philadelphia Fed Business Index

Mortgage Rates Continue to Rise in the Face of Economic Optimism

February 11, 2011

I have begun to use a good news/bad news analogy when speaking with my clients about locking, which I feel provides a good characterization of the week that was in mortgage rates. A good number of these clients had loans in process and chose to follow my advice to lock over the last ten days. The good news for most of them this week is that they secured a mortgage rate at historical lows, the bad news is that the rate is at a 10-month high.

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Chicago’s TaxSmart Program can put money in your pocket

February 9, 2011

by McKenzie Dhyr-Arnold – Guest Contributor

Are you buying a home? If you can answer yes to that simple question you could be eligible to receive an income tax credit equal to thousands of dollars each year with The City of Chicago’s TaxSmart program. This income tax credit is different from the normal income tax deduction everyone who has a mortgage already receives. (You will still receive the standard income tax deduction on mortgage interest).

The City of Chicago’s TaxSmart Mortgage Credit Certificate Program provides a federal income tax credit to qualified homebuyers. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive a MCC (Mortgage Credit Certificate that would be included in their tax returns when filed) to reduce income taxes by an amount equal to 20 percent of the interest paid on a mortgage. The tax credit may be claimed each year the home buyer continues to live in a home financed under this program.

For example, if your mortgage is $300,000 with an interest rate of 5.25%, your federal income tax credit the first year would be $3,129.83. For the second full year your tax credit would be $2,884.33. (With each passing year you pay less in mortgage interest and more in principal, this is standard on fully amortizing loans) Keep in mind your first tax credit might only be a partial amount depending on the time of year you close, for example if you close in the Spring, you would only be paying on the mortgage for approximately 6 months so your tax credit would be just the interest in those 6 months for the first tax credit.

To qualify for this program you must meet a few guidelines for income and purchase price. If live in a household with 3 people or less, your annual income has to be $90,120 or less. If your household has 4 people or more, your annual income has to be less than $105,140.

The purchase price limits are different based on location. If a home is located in a “targeted area” than the purchase price for a single family home (or condo) is $451,000. An example of a “targeted area” would be Ukrainian Village, West Loop, Uptown, and Hyde Park. If the property does not fall into a “targeted area” the purchase price limit is $369,000. There are higher purchase price limits for 2, 3 & 4 unit properties.

If your mortgage banker doesn’t know about this program, you are working with the wrong person. Don’t leave free money on the table, TaxSmart could put tens of thousands dollars in your pocket.

For more information on this program, contact McKenzie Dhyr-Arnold at mckenzieda@gmail.com

Credit standards tighter than ever for Fannie Mae and Freddie Mac loans

February 8, 2011

I rarely do reprints, but I recently found a tremendous article about the new credit standards for Fannie Mae and Freddie Mac loans.  The net takeaway of the article is that the standards for approval on credit and the amount of scrutiny involved in evaluation of a client’s credit history are extremely high.  Management of credit has become more and more important prior to and during the application process.

From the article:

New credit transparency standards imposed on lenders by mortgage giants Freddie Mac and Fannie Mae could affect your mortgage deal. As of Feb. 1, Freddie Mac began requiring lenders to dig back 120 days into your credit bureau files to detect any inquiries — signs of your applying for credit anywhere else — and then to check out whether any applications were approved. If they resulted in significant new debts, your lender might have to revise the terms or the rate you’re being offered.

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Rates begin week trending up on positive economic outlook

February 7, 2011

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.

  • Short-term – LOCK
  • Long-term – LOCK

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

Instability in Middle East Not Enough To Keep Rates Down

February 4, 2011

Well this week I am disappointed. I had a great weekly planned. A parody of Walk Like an Egyptian entitled Riot Like an Egyptian that had all sorts of great connections between the craziness in the Middle East to higher oil prices, a spooked stock market and better mortgage rates, but sadly it did not come to pass. Even the violence that has arisen in the last few days had no effect. So you were mercifully spared my feeble attempts at humor. So what did happen…

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