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	REPORT ON ROCKFORD AREA MORTGAGE RATES
	March 8, 2010 -- To give you a general idea of what it will cost to get a home loan this week, conventional mortgage rates in the Rockford area are mostly in the range of 5% to 5.375% (from 5% to 5.125% last week and 5% to 5.25% the week before). STILL VERY, VERY LOW! A tax credit of up to $8,000 for first time home buyers has been extended until April 30, 2010 for a written binding contract to purchase and closing before July 1, 2010. A $6,500 credit for existing homeowners has been added. The economyis still weak and very unstable, but continues to show more signs of recovery strength with predictions the economy will rebound in 2011. Sales and average home prices here in the Rockford area fell in January partly due to the typical housing slowdown that occurs in winter months, but positive changes are anticipated as we approach summer months. New home starts, new home and existing home sales are still down. When stabilization in the housing market takes hold, it will be a significant factor contributing to overall growth of the economy. The federal government is at the maximum level of intervention with its various programs designed to help bring stability to financial markets. As we draw closer to the end of government supports in March, interest rates will very likely move upward if the market is still on shaky ground and investors for mortgage-backed products need the incentive of higher earnings. Retail sales posted a 0.5% increase last month, but with so many jobs lost, it is difficult to feel like there is an economic recovery in progress even with evidence to warrant some additional optimism ragarding the overall economy.  HOME BUYERS TAKE NOTE: Rockford area banks are ready to lend . With all the changes in banking and new guidelines for lending, it is most important that you talk to your lender and get pre-approved early in the home buying process. New loan guidelines are now making it easier to qualify for a mortgage.  Discuss the new loan programs available to you, find out about the tax credit cash back program, see if you qualify for free down payment money, ask about annual mortgage interest credits. If you are thinking of purchasing a home that needs some fixing-up, ask about the 203k loan which allows up to $35,000 for immediate home improvement. Once you are assured of a loan and know how much house you can afford, you can search for the best home with confidence. So, what is the outlook for mortgage rates? Rates this week continue about the same -- with a chance for moving upward with new government programs or if signs point to inflation that accompanies economic recovery. Inflation continues to be a future issue and as inflation numbers get higher so will the mortgage interest rates. Home sales and prices are down in January but showing small signs of improving, varying on local, regional, and national levels. Foreclosures and bank owned properties are expected to continue to make up a big percentage of sales throughout the year. Freddie and Fannie announced that they would be speeding up their purchases of poor- or non-performing loans from investors. The impact of this move on mortgage rates is not yet known. Other new tools planned by the Fed will enable it to "mop up" excess cash in the market and help to keep inflationary pressure under control. The coming weeks could see mortgage rates become more volatile as the market attempts to digest everything coming out of the Fed and worries continue about manufacturing slowdowns, employment, and consumer confidence. As moderation in this recession takes hold, mortgage rates will likely move upward at a relatively slow pace. As a general rule, good economic data coupling economic optimism with rising inflation pushes mortgage rates upward. For now the market appears to have priced in inflation as a future concern. However, if retail sales leap a lot higher than expected we could see mortgage rates push upward on inflationary concerns. Higher inflation is generally bad for bonds in that the value of the bond is diminished, typically resulting in a decrease in bond prices. Lower bond prices mean higher mortgage rates. Remember, weaker than expected economic data is generally good for mortgage rates, while positive data causes rates to rise. Rule-of-thumb: rates move up quickly and down slowly.  Homes bought in the Rockford area have been extremely price-stable, more so than in most other parts of the country and the government has pulled out all the stops to make buying a home as attractive and easy as it can possibly be for new buyers. For anyone who would like to purchase a home, this is a rare OPPORTUNITY: Prices are still down, rates are way, way down, choices are abundant, value is up ... and you get free tax credit money ... what an excellent time to buy a home. More about FHA mortgages.  More about the EXTENDED AND EXPANDED Homebuyer Tax Credits. Need a loan that gives you your down payment? or a loan that provides you with money to fix up the home you are purchasing? Rockford has not been hit as hard as some other parts of the country, but sales are still down compared to recent record-breaking years. For buyers who can qualify for a mortgage under the new and ever-changing guidelines, there is exceptionally good value out there. It's still good to keep in mind that current mortgage rates, overall, are well below the 1990s average of around 8% for a 30-year fixed-rate mortgage and 6% for the one-year ARM. (See this weeks local rates at top of this page). Each Fed rate cut may help with consumer short term rates on credit cards and adjustable-rate mortgages, but also may spur spending and therefore inflation which is the worst enemy of bonds and home loan rates.  Keep in mind that already low 30 year fixed rates are tied to LONG-TERM bond yields that move based on the outlook for the economy and inflation and therefore may not be affected much by Fed rate reductions which affect SHORT-TERM (Prime) interest rates and Adjustable Rate Mortgages. WATCHING THE FORECASTS? According to a Mortgage Bankers Association forecast at the beginning of 2007, rates were expected to rise to about 6.7% by year end and to about 6.8% by the end of 2008 -- we saw rates posted as high as 6.858% but with the drastic upheaval in the global economy we ended 2008 well below those predictions. 2009 ended in the 5.3% range. Note: while forecasts and predictions may serve as an "educated guess", they are only good the day they are made and turnarounds and changes should be expected. Before the Fed began to push rates up in June of 2005, the funds rate was at a 46-year low of 1 percent. The 1990s average was around 8 percent for a 30-year-fixed-rate mortgage.  The Fed Fund rate is currently 0 to 0.25% with the Prime Rate expected at 3.0 to 3.25%. Changes in the rate especially affect adjustable rate mortgages, home equity loans, and credit card interest rates but generally have little affect on long term mortgage loans. When the US stock market remains relatively stable, the demand for mortgage-backed securities tends to remain stable, resulting in little change in mortgage interest rates. However, as the stock market gains strength, investors seeking higher returns tend to move their money out of the bond market and into the higher yielding stock market. This reduction in the demand for mortgage-backed securities leads to a short-term decrease in bond prices and an increase in interest rates. (When bond prices fall, bond yields and mortgage rates both climb.) Remember, as a general rule, weaker than expected economic data is good for bringing mortgage rates down, while positive or strong economic news causes mortgage rates to rise. Additionally, short-term weakness in the stock market can bring about favorable short-term decreases in mortgage interest rates. Weakness of the U.S. dollar can result in foreign investors selling off bonds, creating turmoil for bond prices and interest rates. Stocks, too, are likely to suffer from a weakening dollar. Imported oil and other commodities also cost more when the US dollar is weak. By historical standards we're seeing very attractive LOW financing costs in the housing market. When rates are low borrowers may be able to afford bigger and better homes -- or simply be able to get the home they wanted at a lower monthly payment than may have been expected. Either way, it still means savings each month and big savings over the life of a mortgage. 2010 is showing signs of improvement over 2009. There has been a new emphasis on starting fresh. It was done before (in 1991) and once done will make for a more stable, profitable housing and lending market. All markets, whether credit, real estate, stock, or bonds, while being cyclical in nature, are historically self-correcting. For the last 6 to 7 years real estate was booming and breaking sales records. The correction we have now is only natural and a result of the overzealous investors and extremely loose guidelines for lending that developed during the boom cycle. Housing prices also have a history of cycles. Since 1979 residential real estate prices have had two 10-year cycles where prices rose significantly, then retreated by about 15% to 20% over the next year or two. Similar booms and busts can be traced back to the early 1900s.   (Click here to find calculators for your monthly payment, monthly income vs loan amount, how much home can you afford, refinancing, home sale net proceeds, and amortization schedule). Mortgage rates are subject to change daily (and even several times a day), so call the bank or mortgage lender of your choice for the latest information. (I've included a list of many of our local lenders and phone numbers below. Please note that this list, and the figures used for rate comparison, does not include all lenders which provide financing and is not a guarantee of rates or options available). Some lenders will have different rates based on points. Simply put, with points you pay a percentage up-front in order to get a lower interest rate on the mortgage. Terms differ among lenders, so remember to check factors such as closing costs and application or origination fees, and how long the quoted rate will apply. The most important thing you can do when starting to look for a home is to GET PRE-APPROVED by the lender of your choice, especially with today's tighter and changing lending guidelines. This will help you to focus on homes in your price range, and, when you find the right home, being pre-approved may mean the difference between getting the home, or missing out because someone else was ready and you were not. If you are a 1st time home buyer be sure to ask about special financing programs available to you. Questions? See my page on mortgage and financing information or Call the lender of your choice. If you are planning on purchasing a home in the Rockford area, then I recommend you work with a local Rockford area lender for their knowledge of the local real estate market and their personal service. If you are buying or selling a home, please don't hesitate to call me at 815-381-6850 or email. I would appreciate the opportunity to work with you and help you make the right decision when buying or selling a home.   While many types of mortgage programs and rates are available to you, these comparison rates are based on a 30 Year Fixed Conventional loan with 5% down and 0 points. Rate and/or fee adjustments may apply. In December 2008 the Fed pushed rates down to a range of 0 to 0.25% and maintained this rate at its last meeting. This is the lowest point ever for this rate which banks charge each other for overnight loans. The Fed rate has a greater effect on short term loans like credit cards and adjustable rate mortgages but usually has little influence on long-term mortgage rates. The prime rate is 3.0 to 3.25%. Regardless of the market ups and downs and national reports of banks holding on to cash to build their balance sheets and not lending to most consumers and businesses, our local banks are telling us that mortgage money IS available and that there ARE PROGRAMS that will help buyers get into a home. Although credit underwriting is tougher and loan terms stricter, borrowers now need to put down 3.5% on an FHA-insured mortgage and 5% on some Fannie Mae and Freddie Mac loan programs with private mortgage insurance. We're being told that there is NO shortage and NO breakdown in funds for the local Rockford area residential mortgage market. As a Realtor I can tell you that there are really exceptional home values out there. There are many, MANY homes now on the market offering extremely high quality at extremely reasonable prices--and that means those who are ready to make the move will get a great deal and a great value. Check with your lender, visit open houses, talk with your Realtor to see if now is the right time for you. Tax credits for home buyers end April 30, 2010. Ask your lender about all of the housing and economic recovery incentives: $8,000 1st time home buyer tax credit $6,500 tax credit for other qualifying buyers who are current homeowners  mortgage interest federal tax credit revised FHA guidelines.
	Mortgage Lender and Phone Number Alpine Bank 815-398-6568 or Mortgage Banker Katie Kauffman at 815-231-2516 or Tom Weingartner 815-231-2742  Allied Mortgage Capital Corp 815-399-2210 Amcore Mortgage 815-961-7200 Get a great deal, right now •Get a home loan in just minutes, online. •Receive a fast, FREE decision. •Enjoy the best rate you're eligible for with a customized loan program and Amcore's  personalized rate. Associated Bank 815-987-3500 Belvidere National Bank & Trust 815-544-2400 Blackhawk State Bank 815-636-4371 Byron Bank 815-234-2561 Chase Mortgage 815-395-0900 Countrywide Funding Corp. 815-636-3540 First Bank ­ Belvidere 815-544-0777 First Federal Savings ­ Rockford 815-987-2850 First Home Mortgage 815-398-8800 First National Bank ­ Beloit 815-623-8734 First National Bank ­ Winnebago 815-335-2366 First Northern Credit Union 815-332-9898 Holcomb State Bank 815-874-6156 LaSalle Bank 815-398-2000 Macktown State Bank 815-624-8111		Maple Park Mortgage 815-637-6300 Members Alliance Credit Union 815-226-2260 National City 815-395-3610 Northwest Mortgage 815-229-9456 Riverside Community Bank 815-397-5000 Rock River Bank 815-397-3111 Rockford Bank and Trust 815-963-2165 Stillman BancCorp 815-332-8100 Union Savings Bank 815-397-6880 U.S. Bank 815-639-2416 Vision Mortgage 815-654-7150 or Loan Officer Rita Schmidt at 815-713-2246 email rschmidt@visionloan.com Easy-to-use quick loan payment calculators Understanding Mortgage Rates and Fees Understanding Mortgage Information and Terms Refinancing Tips Q&A Home Foreclosure and Debt Cancellation -- Tax Consequences

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