Mortgage rates going DOWN

For the seventh time in the past eight weeks, mortgage rates have been on the decline. Rates are once again under 6.5% for a 30 year fixed and 6.1% for a 5 year adjustable, respectively. I actually just had a client who just closed who locked in his rate because he didn't want to risk an increase on his rate, especially with a close date 90 days out. Who could blame him? At the time the Fed was increasing rates and it just wasn't worth the risk. Well, won't you know it, rates started to decline a week before he had to close, and yes, they were below his lock. While my client wasn't able to change his rate, he still had a great rate and an amazing new home. The moral of this story in not to not lock in a rate, but that mortgage rates are not going to run straight through the roof, like so many people feared. According to Frank Nothaft, Freddie Mac VP and Chief Economist, "with short term interest rates increasingly seemingly on hold, for a while at least, interest rates overall should not experience any big shifts in either direction." Not only is this good news for buyers, but for sellers as well. With rates stabilizing at such low rates, that should keep more buyers out there and sellers who are ultimately ready to make that next move, will be able to sell and then buy their new home. And there you have the circle of real estate life.

9/11

So where you when the planes hit the World Trade Center? I don't think I'll ever forget. I was at home getting ready for another day, watching Good Morning America. They broke away because a plane had hit one of the towers and everyone was speculating about what conditions could have caused a plane to fly into one of the tallest buildings in New York City...weather, malfunction of plane controls, etc....all the "typical" things. When the second plane came into view there was silence followed by a collective gasp of disbelief when it to flew into the other tower. It was immediately apparent that this was no accident. Do we live in a different world today then we did 5 years ago? I think most people would say yes, but I think it has more to do with perspective then the world actively changing. For me, it has given me a new appreciation of life and a new patriotism that I personally had never felt. Not to sound cliche, but I firmly live by the principal that everything happens for a reason and 9/11 was no exception. There is a lesson to be learned for all of us as individuals and as a country, let's hope we have taken and continue to take full advantage of this opportunity.

Last Hoorah for summer

If you don't have any big plans for the weekend and you don't mind crowds (my husband has a major aversion to them, how he ever came to love the city is beyond me), the 2nd Annual Lakeview East Fine Arts Festival is going on this weekend on Broadway between Belmont and Roscoe. I myself has never been, but with Chicago's long history of art festivals, I'm sure its bound to be good. While it might be smaller then some of the long-running festivals like the Gold Coast and Old Town/Wells Street festivals, they seem to have made some additions to the typical art festival agenda. They will be having an arts and craft tent for kids and yes, its hands on or in, depending on the child. My personal favorite is the fashion show that will be taking place on Sunday. I unfortunately won't be able to attend, but let me know how it was!

Credit cards, credit scores, and mortgages....Oh My!

The average American household has $9000 in credit card debt and more households are spending a higher percentage of their income just to stay on top of their credit card bills. Naturally, this effects their spending in other areas of their life, including home purchase decisions. Not only does the amount you owe effect how much of a mortgage you can get, but also can effect the mortgage rate that a bank will give you. All this thanks to a handy little tool called a credit score. A major component of your credit score is related to your credit card habits and can play a big, though somewhat complicated role when you're trying to obtain a mortgage. A history of on-time payments is nothing but positive and that is an important thing to lenders. It's the signs of financial "weakness" in that history that can hurt. Often it's not a single factor that will hurt your credit score, but the combination of those factors. So if you're thinking of buying a home in 3 months or 3 years, a little preparation can't hurt. One easy thing right off the bat is to not apply for new credit cards for at least few months before your home purchase. Simply put, it makes the lender wonder why you need the additional credit. I've always thought it best not to let lenders wonder....they have very vivid imaginations. The other factor to focus on is your utilization rate. Basically, this means how much of your total available credit you use on each card. For example, let's say you have a Visa card with a $5000 credit limit and you have $4000 charged on the card. Divide $4000 in charges divided by the $5000 credit limit and you get .80 or 80%. This is your utilization rate. In an ideal world it's good to be as close as possible to a 50% or less utilization rate. A final factor lenders consider is your "total expense ratio." This is the sum of the mortgage payment, property taxes, insurance, and any other debt service you have including, but not limited to credit cards, student loans, etc, all divided by your gross income. This number ultimately helps the lender determine how much you can afford. The lower the number the better, but even if your number is higher than you like it only effects the amount you can borrow not your actual ability to get a mortgage.

Also, we just added this amazing mortgage dictionary to our website. Check it out and you too can speak the language of mortgages!

If you want to see what your credit score is, here are links for the three major credit reporting agencies....Experian, Transunion, and Equifax. Or you can pull your entire credit report for free at www.annualcreditreport.com.

The tearing up of Milwaukee Avenue

As if there weren't enough construction projects going on in the Chicago, the city decided to add Milwaukee Avenue to their list. They are planning on resurfacing Milwaukee from the Kennedy Expressway to North Avenue. The project is slated to start Monday, August 28th, give or take a week knowing the city, and is expected to take 40 days. So in other words, it might be wise to avoid Milwaukee and join the slow procession of traffic down either North or Division. Mind you, I'm only half complaining. I drive down Milwaukee frequently and there always seems to be a new patch or some other bump to help loosen the bolts on your car engine, so while my car appreciates it, my schedule hates it since it's going to take twice as long to get through the area.

The good news with foreclosures?

I'm sure everyone has heard the hoopla about adjustable rate mortgages (ARMs) resetting and the anticipation that there could be a substantial increase in foreclosures in coming years. Over the past few years ARMs have become increasingly popular with their attractive initially lower rates and their ability to allow buyers to buy more house. Especially in areas like California where home prices were increasing at exponential rates, sometimes it was the only way people could buy the home they wanted. Whether this was wise or not is a whole different story. Like most other things in real estate, foreclosures will not affect the country uniformly. Not only do foreclosure laws vary from state to state, but local factors including unemployment come into play. But the news is not all bad. According to an article written by Charles DuBow in Business Week magazine, "a new study by RealtyTrac, which publishes the nation's largest database of pre-foreclosure and foreclosure properties, the situation is not all that bad. In their survey of foreclosure rates in the 100 largest metropolitan statistical areas (MSAs) in the U.S., the second quarter of 2006 actually saw fewer foreclosures than in the first quarter. While Indianapolis, Atlanta and Dallas saw the nation's three highest metropolitan foreclosure rates, other areas, such as Chicago and Portland, Ore., saw a 60% and 188% decline, respectively, from the first quarter." I can't predict the future, but as I see it, it's a good start.

ALERT! A Balanced Story in the Chicago Media!

Since I gave the media a hard time in one of my recent posts, Media Schmedia, I thought it was only fair that I give them credit when they actually presented a impressively balanced story. Last night on the 10 o'clock news on ABC Channel 7 in Chicago this miraculous event actually occurred. Not only did they present a national viewpoint but also presented a Chicago specific perspective from local experts! While they are somewhat inflammatory about interest rates, remember 6% is still historically low, I can forgive them this once. For the whole article go to ABC 7 Chicago's website.