Archive for the 'Mortgage Info' Category
Even With Fee Increase, FHA Loans Still Right Choice For Chicago Buyers
March 19th, 2012 categories: For Buyers, Mortgage Info, Refinancing
Mortgage loans backed by the U.S. Department of Housing and Urban Development’s Federal Housing Administration, better known as FHA loans, will soon become more expensive for homebuyers.
According to financial Web site Bankrate.com (RYAN: http://www.bankrate.com/financing/mortgages/fha-fees-on-the-rise-again/), starting April 1 borrowers will pay more for upfront mortgage insurance provided by the FHA. This follows a rate increase that came in April of last year. As Bankrate reports, FHA loan fees are now at their highest point in the government agency’s history.
Premiums for FHA insurance will rise from 1 percent to 1.75 percent of the base mortgage loan that borrowers are taking out. The FHA says that the increase will add about $5 a month to the mortgage fees that borrowers pay.
That average $5 increase might not seem like a lot. But buying a home is not an easy financial task for many purchasers today. They won’t appreciate any fee increase.
That being said, FHA-backed loans are still terrific options for today’s home buyers. Of course, the FHA does not originate loans. Instead, the government administration insures them. This doesn’t change the fact, though, that FHA loans offer several benefits to homebuyers.
The most important? For most borrowers, FHA-insured loans require down payments of just 3.5% of a home’s final purchase price. This is a key benefit. Conventional mortgage loans often require buyers to put up at least 10 percent of a home’s purchase price as a down payment.
Consider a single-family home or condominium in the Chicago area that costs $200,000. A 10% down payment would require buyers to come up with $20,000. If these same buyers had good enough credit to qualify for a 3.5% down payment with an FHA loan, they’d only have to come up with $7,000. That’s a big difference.
FHA-backed loans are also available to homebuyers with lower credit scores. Borrowers with FICO credit scores of at least 580 will qualify for the 3.5% down payment requirement. Those with credit scores of 500 to 579 will be able to take out an FHA loan with a down payment requirement of 10 percent.
Those borrowers with credit scores under 500 will not qualify for FHA financing.
Even with the fee increase, then, an FHA loan is still a good chance for many Chicago homebuyers.
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Buying A Chicago Condo, Single-Family Home More Affordable Today
December 14th, 2011 categories: Chicago Info/News, For Buyers, Housing Market, Mortgage Info
Mortgage interest rates continue to hover near record lows. This is the best holiday present Chicago home buyers can receive: It gives their dollar more buying power as they search for city condominiums or single-family homes.
According to a recent story in the Wall Street Journal, interest rates in the United States on 30-year fixed-rate mortgage loans averaged 3.99 percent for the week that ended on Dec. 8. That’s down just a bit from the 4 percent average interest rate of one week earlier and down significantly from the rate of 4.61 percent a year earlier.
Interest rates on 15-year fixed-rate mortgage loans were even more impressive, according to data from Freddie Mac. This rate stood at 3.27 percent for the week that came to a close on Dec. 8. That’s down from 3.3 percent from a week earlier and 3.96 percent from a year ago.
The 15-year fixed-rate mortgage interest rate is also just a tick above its all-time low of 3.27 percent, which it hit in October.
This is, of course, great news for consumers interested in purchasing a Chicago condominium or single-family home. Low interest rates mean that it is less expensive for buyers to borrow money. Buyers today, then, can save hundreds of dollars a month on their mortgage loan payments compared to the days when interest rates of 6 percent or 7 percent were considered solid.
On the downside, the process of applying for a mortgage loan isn’t easy today. Buyers will need to send their mortgage lenders paperwork proving that they make enough money each month to afford their new mortgage payments. They’ll also have to produce documents showing lenders how much they pay each month in debt.
Borrowers will also have to submit to a credit check. Lenders today reserve their lowest mortgage interest rates for those borrowers who have FICO credit scores of 740 or higher.
But for those buyers willing to submit their paperwork, and who have strong credit scores, buying a single-family home or condo today is more affordable than it’s been in a long time.
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Thinking Of Refinancing? Now’s A Good Time
November 18th, 2011 categories: For Homeowners, Mortgage Info, Refinancing
The Medill news service last week reported on a surge in mortgage refinances across the country. The reason for this increase is simple: Mortgage interest rates fell once again.
According to the Medill report, which cited figures from the Mortgage Bankers Association, during the week ended Nov. 4 mortgage refinance applications rose by 12.1 percent from the previous week.
These numbers were recorded at a time in which the interest rate for a 30-year fixed-rate mortgage stood at 4 percent and the rate for a 15-year fixed-rate mortgage loan stood at 3.31 percent, according to Freddie Mac.
Homeowners can save a significant amount of money by refinancing. For instance, homeowners with a 30-year fixed-rate mortgage loan of $165,000 with an interest rate of 5.25 percent would pay $911.14 every month. Those homeowners with the same loan but an interest rate of 4 percent would pay $787.74 a month. Those savings add up over the course of a mortgage loan.
However, homeowners should remember that mortgage refinancing is not free. The Federal Reserve Board estimates that homeowners usually pay from 3 percent to 6 percent of their outstanding principal balance in refinance fees. That’s why it’s important for homeowners to work closely with mortgage loan officers to determine if the savings they’ll receive every month by refinancing will allow them to quickly cover the costs of the refinance.
Also, homeowners should realize that a refinance will take some work on their part. They’ll have to meet certain credit requirements to qualify for the best interest rates. They’ll also have to provide plenty of paperwork to their lenders to close the refinance. This often includes tax returns, paycheck stubs, bank checking and savings accounts, credit card bills and other documents.
But those homeowners who do qualify for the lowest interest rates can generate plenty of savings by refinancing. And because interest rates remain so low, this is the perfect time for them to take action.
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Incentives To Buy Homes Now Keep Coming
August 23rd, 2010 categories: Chicago Info/News, Economic Recovery, For Buyers, Mortgage Info
It’s easy to get down on today’s residential housing market. Home values are down. Foreclosures are up. Sales are sluggish.
But all of these factors, which make selling a condominium or single-family home today so challenging, make this a great time to buy a home in Chicago.
The Illinois Association of REALTORS® reported that the median sales price of Chicago homes stood at $230,000 in the second quarter of this year. That’s an extremely affordable price for Chicago. And by taking out an FHA loan, buyers here only have to come up with a down payment of 3.5 percent of a home’s purchase price.
At the same time, inventory levels are high. Buyers have a lot from which to choose when it comes to buying condominiums or single-family homes in some of the city’s top neighborhoods, like Lincoln Park, Ravenswood, Lakeview, Lincoln Square and Streeterville.
Then there’s the news regarding mortgage interest rates. According to the latest numbers from Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage loan stood at an amazing 4.42 percent for the week ended Aug. 19. The rate for the average 15-year fixed-rate loan hit 3.90 percent. Both rates were down from the previous week, and down from the same period one year earlier. This means that buyers today can get more home for their dollars.
Even the high number of foreclosures in Chicago and the rest of the country can mean good news for buyers. When banks and other lending institutions have to re-sell their foreclosures, they usually do so at a greatly reduced price. Again, this gives buyers the opportunity to purchase homes for fewer dollars. Some buyers might purchase a foreclosure to be able to get into a neighborhood that they otherwise could not have afforded.
No one’s arguing that this is a difficult time in which to sell a home. But for first-time buyers and any others who don’t have to first sell a residence, this is a great time to buy.
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Do Record-Low Mortgage Rates Matter Today?
July 7th, 2010 categories: Chicago Info/News, Economic Recovery, Housing Market, Mortgage Info
Let’s talk about the good news first: The average interest rate on a 30-year fixed-rate mortgage fell to 4.58 percent for the week ended July 1. Freddie Mac says that this is the lowest since the mortgage financing company started tracking mortgage interest rates in 1971.
Amy Hoak, a columnist for MarketWatch, lays out the bad news in a recent column: Fewer U.S. consumers seem to care.
Hoak was reporting from the Kitchen & Bath Industry Show in Chicago. This is a fun show, one that showcases the latest trends in kitchen sinks, whirlpool tubs and cabinetry. It’s a place to go to dream of that ideal kitchen or bathroom. It’s hard to imagine, though, that too many of the vendors working the show were having fun this year. As the housing industry has struggled, so have the remodeling and do-it-yourself businesses.
As Hoak writes in her column, consumers aren’t comfortable spending large sums of money today, even if mortgage interest rates are at record lows. They’re worried about losing their jobs. And why not? The national unemployment rate remains stuck near 10 percent. That’s too high to allow people to feel comfortable financially.
At the same time, a large number of homeowners can’t even take advantage of the low rates to refinance their existing mortgage loans. That’s because their home values have dropped since they purchased their condominiums or single-family homes. They may no longer have the 20 percent equity that most traditional lenders require homeowners to have before approving them for a refinance.
Don’t get me wrong: It is good news for home buyers that interest rates are at such low levels. First-time buyers who don’t already own a home are especially fortunate: They can buy more home, even in Chicago neighborhoods such as Lincoln Park, Lincoln Square and Lakeview, while spending less money on a mortgage loan each month.
But until the other fundamentals of the economy improve – lower unemployment, higher housing values – don’t expect a rush of buyers to take advantage of these low interest rates.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
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