Chicago Mortgage Rates near All Time Low; But for How Long?
Freddie Mac reported that 30 year fixed rates dropped to 3.59% with 0.7 in points and fees as of February 5, 2015. This is the lowest interest rates have been since May of 2013 but only .3% off of the all-time lows set back in December of 2012. Chicago mortgage rates have fallen in tandem with these national mortgage rates and make for a very affordable time to purchase a home in the greater Chicago area.
However, the labor department just reported on February 6, 2015, that the economy added 257,000 jobs in January. Although this is certainly welcome news for the economy, it may not be good news for mortgage interest rates. Typically, interest rates tend to increase as the economy improves as investors feel that the Fed may not keep the federal funds rate as low as it has been and may choose to invest money in riskier assets such as stocks.
Chicago Home Prices Still Below 2008 Highs
Combining these low Chicago mortgage rates with home process that have still not quite caught up with previous highs set back in 2008 make today an affordable time to consider purchasing your first home or moving up to a larger home. Keep this rule of thumb in mind regarding mortgage interest rates – every 1% increase in interest rates decreases your borrowing power by approximately 10%. Meaning, your mortgage payment will be about the same for a $400,000 mortgage loan at a rate of 4% as it would be for a $360,000 loan at 5%. If you combine a 1% increase in rates with a 5% to 10% increase in home prices, many would be home purchasers will be priced out of the housing market.
Mortgage Pre-Approval More Important than Ever
In this fairly bust real estate market, many sellers will not even entertain an offer unless you have a very solid mortgage pre-approval. A mortgage pre-approval typically means your mortgage lender has reviewed your credit report, paystubs, W2s and bank statements and has determined that you will likely be approved for a new mortgage.
United Home Loans offers these for free. You can start the pre-approval process through our website or you can call us at (708) 531-8388.