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How do I know what I can afford?
Your monthly payment expenditures (mortgage payment, taxes, insurance, assessments) can be up to 28% of your gross monthly income, and your total debt (car payment, student loan, credit cards) can be up to 36% of your gross monthly income. I would suggest calling a mortgage broker to get a specific figure, and also get a pre-qualification letter indicating this amount. This letter will need to be submitted with your offer to purchase.
How much do I need for a down payment?
The amount of your down payment is really up to you. A typical loan package is an 80/10/10, which means your first loan is 80% of the amount financed, a second loan is 10% of the amount financed, and the last 10% is your down payment. You may also qualify for a 80/15/5, or an 80/20/0. Like most new home buyers, accumulating the down payment is usually what stands in the way of your first home. A mortgage broker can outline the details, and find a plan that meets your needs.
Do I have to pay to work with a Realtor?
No. The commissions paid to real estate agents are paid by the seller side of the transaction, not the buyer side.
I want to buy a new home, but need to sell my existing home first, how does that work?
This is very common, as most people cannot afford the mortgage payment on two homes at the same time for a long duration. Typically, the existing home would be put on the market, and the new home search would occur simultaneously.
When you find a home you like, you can have the offer on that house include a contingency that you must sell your existing before closing can take place. As the closing on your new home gets closer, you can either adjust your price point on your existing home to sell it more quickly, or ask if the seller of your new home can extend the contract time to accommodate you.
If the events occur where your existing home gets an offer before you find a new home, you can arrange for the closing to take place further in the future. It is typically easier to find a new home than sell an existing home, due simply to volume (you are selling 1, yet looking at dozens).
In the city of Chicago, the time a property will be on the market is usually less than 90 days.
Where can I find properties that are for sale?
There are a few good places online to look for properties. The Sunday Chicago Tribune also has several real estate sections.
I found some homes I think I like, now what?
If you find something you may want to buy, we can put an offer in to the seller's agent. I will work with you to determine the best price to offer for the property, then submit the offer to the seller. The seller will accept, reject, or counter the offer. If they counter, I will inform you of their preferred terms, and handle the negotiation with the seller.
What should I look for when I look at a home?
First and foremost, look at the overall space. Ignore the beautiful furnishings, and avoid trying to imagine your stuff in a specific area. Also take note of things that will need to be repaired or upgraded. Take a walk through the neighborhood to see if you like the area, the transportation situation, etc. If it’s a neighborhood you are not familiar with, ask someone you see walking about his or her perception.
How can I know the property doesn't have serious problems?
The seller is required to disclose any known problems that exist on the property. You should also hire an inspector to do a professional walk through. Another tool to use is a home warranty. As part of your offer, you can ask that the seller purchase a home warranty for you. These are usually a few hundred dollars for coverage for 12 months. As a buyer, you can also purchase the home warranty for the property you are interested in.
How much are closing costs?
Usually $3000-$5000. They include attorney fees, city transfer taxes, title insurance, prorated items (taxes, insurance), appraisal fees, and lender fees.
How long does it take to take ownership?
It varies, and is part of the negotiating process. Generally it will take 60-90 days from the time you contact me, until the date of closing.
Where can I find information about neighborhoods I am not familiar with?
You can get information on neighborhoods here.
What does a mortgage broker do?
A mortgage broker looks across numerous lenders to find the best mortgage package to suit your needs. Usually this means the lowest rate. If you have strong ties to a specific lending institution, the by all means continue. Otherwise, have a mortgage broker handle this for you.
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