Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending November 28th, my take on the week’s financial news and how it affected Illinois mortgage rates.

I hope you all had a great Thanksgiving and have given some thought to what you are thankful for. In the mortgage market this week we have one more reason to be Thankful. Mortgage rates dropped this week, by a lot. Over the last month mortgage rates have been flat, and in a holding pattern. The news over the last few months has been consistently grim. The economy is slowing dramatically and the threat of inflation is just a hazy memory from this past Summer. Deflation is the watchword now. The Fed has taken short term rates all the way down to 1% in an effort to get banks to lend money. The government has been trying to get mortgage rates lower in order to jump start the economy, and all of these factors should have made a difference in brining mortgage rates down. But up until now, no luck.

It was a new Fed program announced on Tuesday that did the trick. With this new program the Fed will directly buy up to $600 billion in Fannie Mae and Freddie Mac and other mortgage backed securities, as well as another $200 billion in other consumer credit obligations. This is huge news, and something the Fed hasn’t done in the last 50 years. By moving into the market the Fed is sending a clear signal that they are going to stay in the market and do whatever is needed to keep rates down and get the market moving again. The markets reacted with a buying frenzy, and mortgage rates are about a half point lower now than they were at the end of last week.

If you are about to buy a home, this is great news. If you are thinking about refinancing your home, this could be great news, but it is not going to help everyone. Refinancing your mortgage is a great way to lower your payment and it can help those who need to restructure their debt and those who want to move from an ARM into a fixed rate loan. But many of the people who would get the most benefit from refinancing are those who bought in the last several years, when home prices were at their highest and mortgage underwriting was easier. One issue we are facing now is low appraisal values. Home prices have moved sharply lower, and the value may not be enough to support the mortgage. If you bought with a low down payment the mortgage may be higher than the current value of the home. I’ve seen other cases where the borrower bought the home with 20% or more for a down payment, but if they were to refinance now they would have to pay mortgage insurance. Another issue comes in with those who have a second mortgage or home equity line. When refinancing, the lender on the second mortgage needs to subordinate their mortgage to the new first mortgage, that is, they aren’t going to try and jump in line and take over the first position. This used to be almost automatic. Now it depends on the guidelines and position of the lender on the home equity loan. Still, there are a lot of people who will benefit from a refinance (no-closing cost refinance), and it makes sense to look into your options. If you have an FHA mortgage, you may have the easiest option with an FHA streamlined refinance. This mortgage offers no credit qualifying, often no appraisal and it can lower your payment by a lot. It is worth looking into.

If you are buying a home, the news is all good. With home prices down you get more home for the money, and with mortgage rates down your payment goes even further. If you are a first time home buyer (you haven’t owned a home in the last 3 years) you also can qualify for the first time home buyer tax credit, which means up to $7,500 off of your tax bill next year. As we come into the Holiday season, this is traditionally the slowest time of the year for real estate. If you are in the market and ready to buy, that means you have leverage and there are bargains to be had. The first step to buying a new home is to be pre-approved for a mortgage. Let me know if I can help.

One thing to watch out for if you are getting a mortgage at this time of year, especially a refinance, is how long your rate is locked in for. The sudden drop in rates means a big jump in volume for a mortgage industry that has been steadily downsizing. This means more pressure on appraisers, processors, underwriters and closers. Turn times will be longer, and with the holidays coming up, many people already have vacations planned and are working on short schedules in December. This makes a bigger impact on refinances because here in Illinois as in many areas of the country, you have a three day right of rescission ( a consumer protection giving you the right to back out of a deal after you have signed all the documentation). This means you will have to close your loan at least 3 business days before the lock expires. If someone is locking you in for 30 days or less, you will have to close before Christmas, and with the extra volume that may be a problem. I am locking all my refinances in for 45 days just for insurance and peace of mind. Purchases can be quicker, and we give priority to purchases.

Written by PeterT on Nov-30-08 12:35am

Meltdown far from over, new mortgage crisis looms

With all the doom and gloom about the Mortgageindustry, nothing g is getting any better anytime soon. Take for instance the Black Friday shopping holidays which are normally the boom for all retailers and malls across the US. There were plenty of people that went to shop but extremely cautious of what they are buying. This signals the problem with Mortgage industry and these malls are all also holders or have holdings of huge mortgage loans.

From big malls to hotels and other homeowners who are experiencing the worse economic slump in history are really reeling from this gargantuan mortgage loan crisis. Hotel in Tucson Ariz. And Hilton head S.C. also are about to default on their mortgages. (According to the Associated Press through yahoo new rss feed by Matt Apuzzo – Associated Press- I will put the whole article by the writer at the end of this comments)This very big since these companies are extremely huge and should have the capital to withstand some mortgage turmoil.

With all the economic down turns are grim forecast by experts in the mortgage industry, something is coming to light a small beacon of hope. The mortgage rates in the last four weeks have average less than 6 percent and people or homeowners should take advantage of this and have their Adjustable Rate Mortgage refinanced. Mortgage refinancing will be going to pick in the next little while as most of the big lenders have lowered their lending rates.

So if you have an Adjustable Rate Mortgage which is in the higher end of the payment scale, you need to get mortgage refinancing to a lower interest rate. And to learn more and get guide and information about mortgage refinancing and about your Adjustable Rate Mortgage or any mortgage and financial issues and concerns that matters to you, go to: http://www.JGVFinance.com

Written by OLING on Nov-29-08 10:59pm

Formula for Mortgage

We will let L = loan, n = number of months for repayment, starting at
end of first month, r = percentage interest rate per year, (take r/12
as monthly rate). P = amount of repayment per month (starting at end
of first month).

If we consider the loan first, this would increase by a factor
(1 + r/1200) per month, so after n months the value of the loan would
have increased to L(1 + r/1200)^n

Now consider the repayments.  These are $P per month, but the value of
the earlier repayments also increases at a compound rate (1 + r/1200). 
Thus after the second repayment, the value of the repayments is:

P + P(1 + r/1200)  and after three months it would be:
P + P(1 + r/1200) + P(1 + r/1200)^2   and after n months it would be:
P{1 + (1+r/1200) + (1+r/1200)^2 + ..... + (1+r/1200)^(n-1)}

This is a geometric series with n terms, first term = 1 and common
ratio (1+r/1200), so the sum of n terms is given by

  P{(1+r/1200)^n - 1}/{(1+r/1200)-1)}
= P{(1+r/1200)^n - 1}/(r/1200)
= 1200P{(1+r/1200)^n - 1}/r

We must now equate the total repayments to total value of the loan,
and this gives:

 1200P{(1+r/1200)^n - 1}/r  =  L(1+r/1200)^n

                    P = Lr(1+r/1200)^n/[1200{(1+r/1200)^n - 1}]

Example.  Find the monthly repayments on a loan of $20,000 over 15
years at 12 percent per year compound interest.

Here we have n = 12*15 = 180 months, r = 12, and L = 20000.
We want to find P.

1+r/1200 = 1 + 12/1200 = 1.01   and the above formula becomes


      P = {20000*12*1.01^180}/{1200*(1.01^180 - 1)}

        = {20000*12*5.99}/{1200*(5.99 - 1)}

        = 1437600/5988

        = $240.08


-Doctor Anthony,  The Math Forum
Check out our web site!  http://mathforum.org/dr.math/

Independent Mortgage Advisor

Have you ever walked into an estate agents when looking at buying a house and been jumped upon with the question “What are you doing about your mortgage?”This gets mentioned to you even before they have asked what sort of house you would like. This is then followed by we have an independent advisor who has exclusive deals? The question you need to ask yourself is am I being told the complete truth?

Well having been one of these annoying estate agents in the past and been trained like a monkey word for word to try and convince the customer to come in for a chat you may understand where I’m coming from.

Even though you are told these advisors are independent the chances are they tick the Panelled lending box. The people with the whole of market option (Which is very few) are the ones you really want to speak to.

With this in mind I decided to set up an independent mortgage broker in Southampton who work's closely along side smaller independent estate agents.

The company (MRP Associates Ltd) offers a very relaxed approach to the situation, and is quite unique in the fact that being a whole of market broker we do not charge a fee to the client. On top of this being able to offer life assurance products’ from the likes of companies such as Norwich Union, Liverpool Victoria, and Friends Provident to name but a few, it really is classed as a one stop shop!

I also decided to go out and spend a allot of money on a website www.mrp-associates.co.uk that the customer can actually use, rather then just looking at a selection of rates. The site is updated daily with all mortgage rates and the customer can even apply online via the broker.

If you are looking for a Mortgage Advisor in Southampton who is here to give you the best advice possible then pay us a visit.

Author: Matt Payne

Commercial Real Estate Is Big Business

Commercial real estate often includes property that is used for some kind of business as opposed to real estate that includes private homes and property. The term commercial real estate usually means office and business sights to most people. Although some might break down the field further, commercial real estate might include industrial sights as well. Commercial real estate usually includes deals that are worth a substantial sum of money. The first type of property that comes to mind when talking about commercial real estate is business property that includes office buildings. The term can also include properties such as medical centers, medical buildings, shopping malls and hotels.

Commercial real estate includes most of these types of property that require a substantial sum of money to conclude the transactions. Although the sums of money involved are large, some are much larger than others. Commercial real estate might include thousands of dollars in the transaction, but commercial real estate might also include billions of dollars. Commercial real estate could be the only small motel in a town or a gigantic shopping mall in a metropolis. Commercial real estate could involve two parties, and it could include large, multinational groups of investors.

Commercial Real Estate Involves Experienced Experts

Most of the real estate deals that fall into this category require expertise in a particular type of property. Those agents who work to buy or sell hotels need to know something about this type of business in order to help their clients in either buying or selling the property. The investors looking for this type of real estate are usually intent on making the deal to make a profit. Although people buying personal property would like to see an increase in the value of their property, others buy and sell commercial property in order to make a profit. All of the people involved in the sale are often acting on the behalf of one or more people who expect to make a profit on the property.

The profit from this type of real estate might be from the business that is conducted on the property. A shopping mall in the right part of town might be far more successful than the same type of shopping mall a couple of miles away. The owners of this type of property often look to make their profit by collecting rents from the people who set up their business on the property. Those investors with the best property can usually demand highe

Double Whammy for Senior Mortgages: Falling Prices, Rising Debt

Senior mortgage defaults

Seniors may have a rough go of things in the years ahead. A September report from AARP concluded that 28 percent of all delinquent mortgages in the second half of 2007 were held by borrowers aged 50 and older. That equates to 684,000 senior homeowners, many of whom were living in California, Colorado, Florida, Nevada, and Michigan. Presumably, some of these seniors have already lost their homes to foreclosure.

Additional data from Golden Gateway Financial corroborates a deteriorating financial condition among seniors. The firm collects anonymous information through its online reverse mortgage calculator, and makes this data available to the public on a quarterly basis. The third quarter numbers show an increase in the average age of homeowners pursuing reverse mortgages. Further, the percentage of these homeowners who have existing mortgage debt is going up, too.

Golden Gateway's data also shows declining home values among these older, mortgage-strapped homeowners. Seniors reported an average home value of $428,786, which is down 4.5 percent from the level reported in the first quarter.

Retirement planning puzzle

Foreclosed and debt-strapped seniors who are seeking a reverse mortgage have two things in common: they both lack cash, and they both lack home equity. Since most retirement planning strategies require one or the other, these elders may have no choice but to go back to the workforce just to get by. The problem is particularly severe for those who've watched their fixed investment income dry up as interest rates continue their historic decline.

Should home values recover significantly in the short-term, cash-poor seniors could either borrow against their equity, or sell the home and downsize. But when 65 percent or more of the home is already financed, neither of these options offers much benefit. Consider the homeowner who owes $175,000 on a home worth $250,000. She could sell and try to find a new place to live for $75,000. Or she could fund a reverse mortgage. According to AARP's reverse mortgage calculator, this scenario would net only about $90,000 prior to fees, but after paying off the first mortgage debt.

In short, the real life Whammy of insolvency is lurking out there for many seniors. This is just another reason to hope that housing values recover and our economy finds a quick way out of this mess.

By:

Catherine Brock | November 27, 2008