Fed meeting: Wealth Economic Update Sept 26, 2016

Posted on September 26, 2016 by oldsecondbank

U.S. and World News

The Federal Reserve held its September policy meeting this week and decided to hold the Fed Funds rate at its current level. The decision was not unanimous as there were three dissenting members of the committee that favored raising rates at this meeting. The statement given after the decision included the language “near-term risks to the economic outlook appear roughly balanced” which many interpret as a rate hike being near. The next policy meeting will be held in November but given that it will take place before the Presidential election, it is not expected that a rate hike would occur at that meeting. As a result, the December Fed meeting has become the focus with markets currently pricing in a roughly 50% probability of a hike.
The Bank of Japan also held interest rates steady, although speculation was that they could cut rates further into negative territory as opposed to raising them. While they did not move rates, the BOJ did modify its policy framework in an attempt to spur more economic growth. Among the changes, the central bank said it would introduce yield curve controls, eliminate the maturity range of its bond purchases and confirmed that cutting rates further remains an option down the line.

Markets

This week the S&P 500 finished up 1.19% and closed at 2,165. The Dow Jones rose 0.76% and closed at 18,261. So far in 2016, the S&P is up 7.51% and the Dow is up 6.83%.
Interest rates were down slightly from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.18% and 1.62%, respectively.
The spot price of WTI Crude Oil rose 3.84% this week to close at $44.68 per barrel. WTI Crude is up 11.56% in 2016.
The spot price of Gold was up 2.14% this week, closing at $1,338.38 per ounce. Year to date, gold prices are up 26.13%.

Economic Data

Initial jobless claims came in at 252,000, down from last week’s reading of 260,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 259,000.
Housing starts declined -5.8% in August, worse than expectations of a -1.7% drop. Starts on single family (-6.0%) and multi-family (-5.4%) were both weak in the month.
Existing home sales declined -0.9% in August, missing expectations of a 1.1% increase. On a regional level, existing home sales declined in the South (-2.7%), West (-1.6%) and Midwest (-0.8%), while sales rose in the Northeast (+6.1%).

Fact of the Week

The 6.22 million tax returns from 2014 that reported at least $200,000 of adjusted gross income (AGI) represented 4.2% of all returns filed, received 34.2% of all AGI nationwide and paid 58.2% of all federal income tax paid during that year. (Source: Internal Revenue Service)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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Opportunities and Trends in Commercial Real Estate

Posted on September 20, 2016 by oldsecondbank

Thomas Wallace, Senior Vice President – Commercial Real Estate

For real estate investors and developers, the ongoing stagnation of interest rates at the current and historically low levels continues to represent an excellent financing opportunity. It also has made it a little more challenging to find attractive deals due to increased competition after several years of recovery in the real estate market. But in our area, these deals remain plentiful.

Investors Are Shifting Their Attention to the Suburbs

As competition in the downtown Chicago market has narrowed return prospects, savvy investors have headed west in search of opportunity.

Demographics have also begun to favor the suburbs. There has been an influx of Millennial renters looking for more value for their leasing dollars. With homeownership currently well below its historical high, investors and developers could benefit in the future, as these young renters start to form families, look for schools and establish roots in the area.

In fact, we’ve been involved in financing more multifamily projects recently. Some of these deals also benefited from a developing trend: deconverting condo complexes into rental units.

Beyond apartment projects, opportunities involving industrial spaces, suburban office properties, self-storage, strip malls with leasing strength and single-credit tenant deals (such as those involving national drugstore chains) also remain robust.

Who Is Investing?

Today, the market is dominated by strong, experienced real estate investors who have the economies of scale needed to build one- and two-story, 200-plus-unit apartment building projects.

Developers who can buy distressed office properties, rehab them and lease the resulting suites at Class A rental rates are also quite active. Additionally, we are seeing growing opportunities for clients with 1031 exchange funds who are interested in single-credit tenant deals where the strength of the tenant drives the deal and the service provided enhances the livability of the area. Examples of this would be deals involving properties leased to large national chains like Walgreens or CVS.

Access to a Competitive Advantage

As investors and developers move beyond the Chicago city limits, it helps to have a resource with deep roots in the area. And, in a competitive deal-making environment, it can help to work with a lender that can customize financing structures and approve them with speed.

Thanks to a rare combination of experience and a flat organizational structure, banks with local experience like Old Second have the freedom to be more creative when it comes to customizing financing structures in instances that don’t quite fit the standard transaction formula. It also means decisions are made, not passed up the organization, saving real estate borrowers time and frustration.

Whether you are a seasoned developer or a professional real estate investor—or if you are looking to complete a 1031 exchange—we invite you to call us at 630-906-2000.

You can also visit us here. We can’t wait to talk to you about what we can do for you today.

Russia-US-Syria: Wealth Economic Update Sept 19, 2016

Posted on September 19, 2016 by oldsecondbank

U.S. and World News

The United States and Russia have agreed on a cease-fire in Syria with support from Syrian President Bashar Assad, and as part of the deal, Syria will continue to strike at the Islamic state for one week until the U.S. and Russia take over. The cease-fire was successful in its first full day with no recorded combat deaths and a cautious effort to deliver aid to fortified areas has begun. However, the ability of the U.S. and Russia to work together on the fight against ISIS has been questioned as they have begun to accuse one another of failing to do their part in the agreement.
Greece has stated that it plans to tell its creditors that it is unable to comply with the labor reforms set by the IMF for its €86 billion bailout. The terms of the labor reform is a ban on the right of workers to collectively negotiate wages and conditions.
The Bank of Japan plans to continue the use of negative interest rate policy for monetary easing. Negative interest rate policy has been in use by the BOJ since February in an effort to meet their 2% inflation target. The policy has come with repercussions such as a stronger Yen and lower margins for financial institutions.
The market currently has priced in a 20% probability of a 0.25% rate increase from the Federal Reserve next week.

Markets

After a volatile week, the S&P 500 finished up 0.59% and closed at 2,139. The Dow Jones rose 0.25% and closed at 18,124. So far in 2016, the S&P is up 6.26% and the Dow is up 6.04%.
Interest rates were up slightly from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.69%, respectively.
The spot price of WTI Crude Oil fell 5.82% this week to close at $43.21 per barrel. WTI Crude is up 16.60% in 2016.
The spot price of Gold was down 1.33% this week, closing at $1,310.21 per ounce. Year to date, gold prices are up 23.48%.

Economic Data

Initial jobless claims came in at 260,000, up slightly from last week’s reading of 259,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 261,000.
Retail sales declined by 0.3% in August compared to consensus estimates of a decline of 0.1%. The decline in oil prices transitioning to lower gasoline station sales is part of the reason for this.
The Consumer Price Index (CPI) increased by 0.2% in August compared to consensus estimates of 0.1%. The increase reflects increased prices in medical care commodities and services.

Fact of the Week

More than 1 in 3 employed Americans (36%) work for companies that do not offer an employer-sponsored retirement plan, a total of 55 million workers lacking access to a plan (source: AARP, DOL).

Please contact a member of the Wealth Management Department if you have any questions about this information.

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Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Interest rate outlook: Wealth Economic Update September 12, 2016

Posted on September 12, 2016 by oldsecondbank

U.S. and World News

European Central Bank President Mario Draghi*

The European Central Bank decided to hold interest rates at their record low levels and refrained from adding any new stimulus to the economy. Investors had anticipated that ECB President Mario Draghi would take more action or at least provide clearer indications of future actions. However Draghi stated, “Our program is effective and we should focus on its implementation.”
Markets were hit with their worst day in months on Friday, largely believed to be due to comments made by historically dovish Boston Fed President Eric Rosengren. Rosengren stated that “a reasonable case can be made” for raising interest rates and that the Fed faced increasing risks if it waited too much longer to hike. He did not specifically address September’s policy meeting but these comments, coupled with the ECB’s inaction have led many investors to believe that a September rate hike is very much on the table.

Markets

This week the S&P 500 was down 2.36% and closed at 2,128. The Dow Jones fell 2.15% and closed at 18,085. So far in 2016, the S&P is up 5.64% and the Dow is up 5.78%.
Interest rates moved up during the week, particularly following Boston Fed President Rosengren’s comments. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.22% and 1.67%, respectively.
The spot price of WTI Crude Oil rose 3.21% this week to close at $45.70 per barrel. WTI Crude is up 14.11% in 2016.
The spot price of Gold was up 0.20% this week, closing at $1,327.83 per ounce. Year to date, gold prices are up 25.14%.

Economic Data

Initial jobless claims came in at 259,000, moving down from last week’s reading of 263,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 261,000.

Fact of the Week

The average interest rate paid by the U.S. government on its debts was 2.26% as of July 31^st. This has come down more than 2% from an average 4.38% the government paid eight years ago. Every 1% increase in the cost of debt for the nation’s estimated $14 trillion in debt is equal to an additional $140 billion in annual interest payments. (Source: Treasury Department)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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*Image of Mario Draghi, Photo credit: World Economic Forum, via Wikimedia Commons. License: Creative Commons Attribution-Share Alike 2.0 Generic license. (See, https://commons.wikimedia.org/wiki/File:Mario_Draghi_-_World_Economic_Forum_Annual_Meeting_2012.jpg).

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Brazil impeachment: Wealth Economic Update September 6, 2016

Posted on September 6, 2016 by oldsecondbank

U.S. and World News

Brazil’s senate has voted 61-20 to impeach suspended President Dilma Rousseff. She was on trial for her role in altering government fiscal accounts by using illegal loans from state banks to hide the true fragile state of Brazil’s finances in order to get re-elected in 2014. Acting President Michel Temer has been sworn in as her replacement. Rousseff claims the ouster was a parliamentary coup and pledged to appeal her impeachment, calling on supporters to fight the conservative agenda she believes has been empowered by her dismissal.
President Obama has appointed a seven member board that will oversee the financial restructuring for debt-laden Puerto Rico. Obama drew from a list of candidate in finance and academia who were recommended by leaders in Congress. Puerto Rico’s governor, Alejandro Garcia Padilla, was also named to the board but since he is not seeking a second term, he will be replaced by his successor in November.

Markets

This week the S&P 500 was up 0.56% and closed at 2,180. The Dow Jones rose 0.62% and closed at 18,492. So far in 2016, the S&P is up 8.16% and the Dow is up 8.06%.
Interest rates were down marginally this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.60%, respectively.
The spot price of WTI Crude Oil fell 7.05% this week to close at $44.28 per barrel. WTI Crude is up 10.56% in 2016.
The spot price of Gold was up 0.29% this week, closing at $1,324.98 per ounce. Year to date, gold prices are up 24.87%.

Economic Data

Initial jobless claims came in at 263,000, a minor increase from last week’s reading of 261,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 263,000.
The monthly employment report showed a gain of 151,000 jobs during August, below the expected 180,000. Figures for the prior two months were revised down a combined 1,000 jobs, bringing the three month average for job gains to 232,000.
- Headline unemployment remained at 4.9% and the labor force participation rate was also unchanged at 62.8%.
- Average hourly earnings rose 0.1% in August, missing expectations of 0.2%. On a 12 month basis, wages have risen 2.4%, down from 2.7% in July.
Personal Consumer Expenditures (PCE, measure of inflation) was flat in July, in line with expectations. Over the last year, headline inflation has risen 0.8% as measured by PCE.
- Core PCE (excludes food and energy prices, preferred measure of inflation by the Fed) rose 0.1% and is now up 1.6% year over year, both in line with estimates.
The Case-Shiller home price index moved down -0.1% in June, which was in line with consensus expectations. Results were mixed with 11 of the 20 surveyed cities seeing price increases. Over the last 12 months, home prices have risen 5.1%.

Fact of the Week

As of August 18^th, the U.S. national debt stood at $19.445 trillion. It had taken 293 days (since 10/30/15) to add the latest $1 trillion of debt. It took America 205 years (1776 to 1981) to accumulate its first $1 trillion of debt. (Source: Treasury Department)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Fed Symposium: Wealth Economic Update Aug 29, 2016

Posted on August 29, 2016 by oldsecondbank

U.S. and World News

The annual Federal Reserve Bank of Kansas City economic symposium in Jackson Hole, Wyoming began on Thursday and will run through Saturday. Central bankers and economists from around the world have gathered at the event which this year has the title of, “Designing Resilient Monetary Policy Frameworks for the Future.” Federal Reserve Chairwoman Janet Yellen delivered her keynote speech on Friday which had been highly anticipated by market participants. Yellen stated that the “case for an increase in the Federal Funds rate has strengthened in recent months,” which was viewed as somewhat hawkish. She tempered that with the comment, “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy,” referencing potential risks overseas. Overall, there was no clear direction given on the path of interest rate policy.
Brazil’s senate has begun the impeachment trial of suspended President Dilma Rousseff this week. The process is likely to wrap up late next week with a final impeachment vote being held. The likelihood appears to be high that Rousseff will be removed from office on charges that she doctored government fiscal accounts in order to get re-elected in 2014. Brazilian markets have rallied lately on the prospect of the right-wing Vice President and acting President Michel Temer permanently taking over from the leftist Rousseff. Temer would face the tall task of having to drag Brazil’s economy out of its worst recession since the Great Depression and bringing down a massive budget deficit.

Markets

This week the S&P 500 was down 0.67% and closed at 2,169. The Dow Jones fell 0.85% and closed at 18,395. So far in 2016, the S&P is up 7.57% and the Dow is up 7.41%.
Interest rates increased this week following Janet Yellen’s speech at Jackson Hole on Friday. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.62%, respectively.
The spot price of WTI Crude Oil dipped 2.49% this week to close at $47.31 per barrel. WTI Crude is up 18.13% in 2016.
The spot price of Gold was down 1.48% this week, closing at $1,321.60 per ounce. Year to date, gold prices are up 25.55%.

Economic Data

Initial jobless claims came in at 261,000, edging down from last week’s reading of 262,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 264,000.
New single-family home sales rose by 12.4% in July, bringing the seasonally adjusted annualized rate to the highest level since late 2007. New home sales increased in the South, Northeast and Midwest, while remaining flat in the West region.
Existing home sales declined by -3.2% in July, more than an expected 1.1% decline. Single family sales decreased by 2.0%, while multi-family sales fell 12.3% following solid gains in June.

Fact of the Week

The average rate of return on the Dow Jones Industrial Average during the 26 Summer Olympic Games dating back from 1900 through 2012 was an impressive 4% from the opening to closing ceremonies, with positive returns seen 68% of the time. This year’s Games which just concluded continued this trend as the Dow Jones was up 1.65% during the two weeks of the Rio Olympics. (Source: Bespoke Investment Group)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

5 Things to Consider When Deciding If a Wealth Advisor Is Right for You

Posted on August 23, 2016 by oldsecondbank

Rich Gartelmann, CFP®, Senior Vice President/Senior Investment Officer—Wealth Management

Choosing an investment advisor, like so many things in life, is all about finding a comfortable fit. If the relationship is going to work, you have to be comfortable not only with the person, but the company they represent and the approach they take to making recommendations and decisions regarding your future.

Taking Measure
Here are five things to keep in mind when evaluating an advisor to determine if they are a good match for you.

Who does more talking in the meeting? Your meetings, especially the first meeting, should mainly be about you, not an advisor’s services and products. The advisor should be focused on listening to you talk about your goals for your money, your attitudes toward risk and your current needs. Only then can they know what services and products they should be discussing with you.
How are they paid? When it comes to fees, it shouldn’t be about finding the lowest fee option but about finding the advisory relationship that provides you with the greatest value. That value should be a combination of good advice, a full range of services and the potential for achieving the long-term results you seek. For instance, wealth management departments like ours are fee based.
How responsive is their approach to change? Automated advisor platforms are becoming more and more popular. They are certainly more economical. But, they are programed based on averages and logic. Your life is probably not average. It’s likely to be highly dynamic with unexpected events and expenses. When life doesn’t go as planned, it helps to be able to talk to a person who can advise you on how to make adjustments while keeping you on track for your reaching your goals.
What are their qualifications? Many wealth managers—ours included—have earned the Certified Financial Planner (CFP®) designation. The designation is awarded after the completion of a rigorous certification process. To retain the certification, CFP®s have to meet ongoing education requirements. But, before handing your personal information over to anyone, no matter how many designations they have after their name, you should still follow a “trust but verify” policy. Find out if they have ever been disciplined for unethical or unlawful behavior. The Financial Industry Regulatory Authority (FINRA) makes checking backgrounds easy through its online source, BrokerCheck. You can also look up registered investment advisers—those registered with the SEC or the state’s regulatory authorities here.
Are they willing to provide a preview? To get a feel for what your experience would be like if you were a client, ask the advisor about how often and under what circumstances you’ll hear from them. Also, ask how they communicate—is it by phone, email or will they text you for a quicker response? Then, request referrals from current clients and talk to them about what they like and wish would improve about their relationship.

In the end, hiring an advisor is a lot like hiring an employee—their qualifications, attitude and work ethic need to match yours for a long and successful relationship to flourish.

For more information on how we approach and deliver wealth management services, visit us here or call 630-906-2000. We can’t wait to talk to you about what we can do for you today.

July Fed Meeting: Wealth Economic Update Aug 22, 2016

Posted on August 22, 2016 by oldsecondbank

U.S. and World News

Minutes from the July Federal Reserve meeting were released this week and showed that the Committee continues to be patient regarding further interest rate increases. Several members noted that inflation continued to be low and saw little risk of waiting for inflation data to firm up before taking further tightening action. Committee members also noted that while markets rebounded from the surprising Brexit vote, they continued to see a variety of risks overseas.
China’s State Council has approved the launch of the Shenzhen-Hong Kong Stock Connect, which will serve as a trading link between the two area’s stock markets. It will be operational in about four months and will be similar to the existing Shanghai-Hong Kong link that was launched in late 2014. It is expected that this new agreement will further open up China’s market to outside investors.
In a live broadcast, suspended Brazilian President Dilma Rousseff said that, “Impeachment without a crime, if consummated, would be a coup.” Rousseff also called for early elections in an attempt to unite the country that is currently in recession. Rousseff was suspended in May on accusations that she doctored government fiscal accounts in order to get re-elected in 2014. It’s widely expected that she will be impeached and permanently removed from office later this month.

Markets

This week the S&P 500 was up 0.06% and closed at 2,184. The Dow Jones rose 0.02% and closed at 18,553. So far in 2016, the S&P is up 8.28% and the Dow is up 8.31%.
Interest rates increased this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.16% and 1.58%, respectively.
The spot price of WTI Crude Oil gained 9.17% this week to close at $48.57 per barrel. WTI Crude is up 21.27% in 2016.
The spot price of Gold rose 0.41% this week, closing at $1,341.47 per ounce. Year to date, gold prices are up 26.42%.

Economic Data

Initial jobless claims came in at 262,000, moving down from last week’s reading of 266,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 265,000.
The headline Consumer Price Index (measure of inflation) was unchanged in July, in line with forecasts as a decline in energy prices offset moderate gains in other components. Over the last 12 months, headline CPI has risen 0.8%.
- Core CPI (excludes food and energy prices) showed gains of 0.1% in July, less than the expectation of 0.2%. Over the last year, ‘core’ prices have risen 2.2%.
New housing starts increased by 2.1% in July, beating consensus expectations of a -0.8% decline. Single family starts increased 0.5% in the month, while multi-family starts increased by 5.0%.

Fact of the Week

Of the households headed by a currently employed individual (i.e, a “working” household), 44% do not have any money invested on a pre-tax basis in a defined contribution plan, e.g., a 401(k) retirement plan. (Source: Government Accountability Office)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Brazil impeachment trial: Wealth Economic Update Aug 15, 2016

Posted on August 15, 2016 by oldsecondbank

U.S. and World News

The Olympic Games have begun in Brazil but that did not stop the country’s Senate from voting to put suspended President Dilma Rousseff on an impeachment trial. Rousseff had been suspended from her post for allegedly illegally financing government spending. The decision to proceed with impeachment hearings could seal her fate and lead to her successor Michel Temer taking the post on a permanent basis as early as this month.
Vladimir Putin has promised to respond in kind to what he called Ukraine’s “terror” tactics in the disputed region of Crimea. Fighting between Ukrainian government forces and Russian-backed rebels has intensified once again with two servicemen being killed in clashes in the last week. Putin also threatened to cancel the peace negotiations at next month’s G20 meeting and called the talks “pointless”.
On Thursday, in an event that hadn’t occurred since December 31, 1999, the S&P 500, the Dow Jones Industrial Average and the NASDAQ indices all set all-time highs on the same day. This accentuates a strong comeback in equity markets from historically the worst start to a year which saw those same indices decline more than 10% through mid-February.

Markets

This week the S&P 500 was up 0.12% and closed at 2,184. The Dow Jones rose 0.33% and closed at 18,576. So far in 2016, the S&P is up 8.21% and the Dow is up 8.29%.
Interest rates dipped a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.10% and 1.51%, respectively.
The spot price of WTI Crude Oil gained 6.96% this week to close at $44.71 per barrel. WTI Crude is up 11.64% in 2016.
The spot price of Gold was unchanged this week, closing at $1,335.97 per ounce. Year to date, gold prices are up 25.90%.

Economic Data

Initial jobless claims came in at 266,000, edging down from last week’s reading of 269,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 263,000.
Retail sales were flat in July, missing expectations of a 0.4% acceleration. Solid increases in vehicle and parts sales were offset by lower gas station sales as fuel prices declined. Core retail sales (excludes autos, gasoline and building materials) also showed no gain, underperforming estimates of 0.3%.
The University of Michigan consumer sentiment index moved up to 90.4 from 90.0 in the initial August release. This was a bit below expectations of a 91.5 reading. Within the report, consumers’ assessment of current economic conditions declined while their expectations of the future improved.

Fact of the Week

Americans spent $3.63 billion less at gas stations in June 2016 compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (Source: Census Bureau).

Please contact a member of the Wealth Management Department if you have any questions about this information.

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Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Five Reasons You Should Look Into the HARP® Refinancing Program Today

Posted on August 9, 2016 by oldsecondbank

Terri Hanson, Vice President—Residential Lending

The Home Affordable Refinance Program (HARP) may be easy to brush off, given all the flashing Internet ads that use it as clickbait. But, HARP is a real government program. Better yet, it can result in lower monthly payments—and/or a shorter maturity—for those who qualify.

Don’t Assume This Doesn’t Apply to You
If your current conventional mortgage closed prior to May 29, 2009, and is held by either Fannie Mae or Freddie Mac, it pays to see if you qualify for this program. If you checked several years ago, it’s time to check again. The restrictions on HARP loans have changed since the program was first introduced.

To find out the closing date of your loan and to verify which agency holds it, you can use the Loan Lookup tool. Or, you can just call us. We’re happy to look it up for you, whether you originated your current mortgage with us or not.

In addition to the loan date and holder criteria, you qualify for HARP if the following statements are also true:

Your home is your primary residence, a second home or an investment property.
Your home value has declined, and your loan-to-market value is greater than 80 percent.
You’ve had no late payments in the last six months and no more than one late payment in the six months prior to that.

Qualification is the first step, and determining if it makes dollar sense is the next. That’s also something we can help you with. We’ll do the calculation to make sure that after factoring in closing costs, HARP offers a sufficient benefit. We’ll also check to see if there are other programs available that might be better for your situation.

Five Reasons to Refinance Under HARP Now
If you are weighing the hassle of refinancing with just staying with the mortgage you have, here are five reasons why you should take action, now.

Interest rates have fallen since May 29, 2009, which may mean you can refinance at a lower rate and reduce your monthly payments. Remember, even if your mortgage is at a 4 percent level now, with rates currently in the 3 percent area, that could significantly reduce your interest costs over the life of your loan.
Refinancings don’t have to be apples to apples. If you are currently in an adjustable-rate mortgage (ARM) and want to refinance into a 30-year mortgage under this program, you have that option. You can even switch from a 30-year term to a 15-year term. Changing the term may also lower your payment or help you pay the mortgage off sooner.
The program is very forgiving of changed circumstances. If your income is lower than it was when you borrowed, your credit score has fallen, you no longer have any equity in your home, or even if you’ve declared bankruptcy, you may still be able to reduce your monthly payments under this program.
PMI won’t be triggered by a HARP refinancing, even if your current loan-to-value ratio is below 20 percent. If you don’t have to pay PMI currently, you won’t have to under a new HARP mortgage.
The window of opportunity is closing. HARP ends December 31, 2016, and this time it is not going to be extended.

For more information about HARP online or on any of the other types of home loans we offer, click here. To have us determine your qualification and to discuss which financing structure is right for your situation, contact us at 630-466-4843 or email thanson@oldsecond.com. We can’t wait to talk to you about what we can do for you today.

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