A new home tends to be the largest purchase and investment most people will make, and a mortgage is therefore the largest debt a family might face in their lives. In light of that, many may consider trying to push themselves to pay their mortgages off earlier than planned. There are a handful of questions to consider, however, before choosing this course of action.

Would you deplete an emergency fund? Having money on-hand for unexpected circumstances can bring you more peace of mind than having less debt.

Could that money be better invested to produce a better return? Paying down debt seems like a good strategy in the short-term. If you have the money to spare, check with a financial planner to see if you might better benefit in the long-term from investing in certain stocks and bonds instead.

Are you planning to stay in this home for a long time? If your plans for the near future are to upgrade to another home, there’s no real benefit to paying down your current mortgage any faster. Depending on the market, you could end up stuck in a house you’re trying to sell.

Does your annual budget rely on the tax credit you receive? Remember that your mortgage interest represents a tax deduction that slowly decreases as you pay off the debt. Depending on your financial situation, you might be better served by keeping the debt and the deduction, rather than removing the debt.

The answers to these questions will help you make the smartest decision when it comes to paying off your mortgage.

Market Comment


Mortgage bond prices were higher last week which pushed mortgage interest rates lower. Rates were helped considerably by the Fed announcement which indicated they would try to keep rates low through 2014. This was a significant revision to prior remarks which set 2013 as the timeframe. The Fed went on to note that global markets pose significant downside risk to the US economic outlook and inflation remains subdued. Much of the data released was bond friendly. Higher than expected weekly jobless claims and weaker than expected GDP data helped rates hold the improvements towards the end of the week. Mortgage bonds ended the week better by almost a discount point.

ISM


The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs fairly well.

In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index. A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can cause market swings.

Copyright 2012. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com. The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

Lincoln Park is one of Chicago’s oldest and most storied neighborhoods, boasting several famous landmarks and attractions. It is currently considered one of the liveliest neighborhoods on the city’s north side, home to several dance and music clubs, theaters, and other nightlife enjoyed by the young urban professionals and DePaul University students who populate the area.

When Chicago was first incorporated as a city in the early 1800s, the area that would eventually be known as Lincoln Park was just outside of the city limits to the north, and was comprised primarily of small Native American settlements, prairie, swamp, and an Army outpost. As it was claimed and developed, it came to be known as Lake View Township, and included a public space known as Lake Park. After President Lincoln’s assassination in 1865, Lake Park was renamed Lincoln Park in his honor. Residential areas steadily grew in the area over time, but the Great Chicago Fire in 1871 devastated much of the area, and the period at the end of the 19th century saw Lincoln Park grow substantially as construction flourished. Today, nearly half of the buildings in the neighborhood can trace their origins back to this post-disaster period. Brownstones and townhomes make up the majority of the real estate in this area, servicing single families and younger homeowners, but also catering to wealthier home buyers with larger, Victorian-style homes in parts of the neighborhood.

The development of the neighborhood into a destination for successful professionals and their families was bolstered by the initiatives to create parks and preservations throughout the area. Many of the streets have been lined with tall, green trees and carefully pruned bushes. Oz Park, in the heart of the region, remains a lush and open attraction, including its lovingly crafted statues of characters from The Wizard of Oz (author L. Frank Baum was one of the noted residents of Lincoln Park). Lincoln Park is also home to the Lincoln Park Conservatory and the Lincoln Park Zoo, both of which offer tourists and residents the opportunity to go outdoors and explore the natural trappings of Chicago for free.

Market Comment

Mortgage bond prices were lower last week, which pushed mortgage interest rates higher. Inflation fears were reignited when the core producer price index came in higher than expected. Germany had a successful 2Y debt auction, which alleviated some of the short-term Euro debt concerns. Germany has been one of the few bright spots for the Euro and is credited with keeping other Euro nations afloat. Spain and France also had decent debt auctions later in the week, which also reversed some of the flight-to-quality buying of US debt we saw recently. The weekly jobs data wasn’t as bad as expected which also added to MBS losses for the week. 

Mortgage bonds ended the week worse by approximately 1/2 of a discount point.

Fed Focus

The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.

No rate changes are expected at the Wednesday meeting but there is concern about the future. The Fed indicated they hope to keep rates low into 2013 but also indicated they would be ready to make changes to that policy as warranted. Their post-meeting remarks will be carefully analyzed.



Copyright 2012. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

Variety is the key ingredient of Bucktown, Chicago’s west side neighborhood located within the larger community of Logan Square. Older architecture and newer builds house a diverse population and a vast array of businesses, including arts and entertainment purveyors and restaurants. Today, it is considered one of the trendiest neighborhoods in the city, both as a spot for nightlife and a place to take up residence.

Bucktown has seen several different population surges from peoples of differing ethnicities and walks of life. Deriving its nickname from the herds of goats raised by the region’s first settlers in the mid 19th century—primarily Polish immigrants—the streets reflected the sensibilities of those settlers, being named after Polish cities and historical events. For a time, the area was referred to as “Little Poland” or “Polish Downtown.” A wave of German-born settlers in the early 20th century had those streets altered into Germanic names such as Hamburg and Berlin, and anti-German sentiment during the First World War had those names changed again into the familiar, Anglo-Saxon varieties seen today. The community additionally has a significant population of Latinos, who surged into Chicago in the middle part of the 20th century, and a more recent influx of young artists has also influenced the growing prosperity of the neighborhood. This blending of different cultures and styles has helped Bucktown attain its unique character today.

In terms of real estate, the neighborhood mixes classic, century-old architecture with newly refurbished loft spaces and condominiums. Its growing attraction for young professionals led to new homes being built with high-end features, such as stainless steel fixtures and rooftop balconies. One can find homes of all sizes in the area, both for single professionals and single families. The businesses range from storefront boutiques to late-night lounges, and the choices for dining are among the most extensive to be found in any of the city’s neighborhoods.