Chicago's North Shore - North and Northwest Suburbs Real Estate

If you are considering purchasing a home, now is certainly the right time for buyers. With historically low interest rates, first time homebuyer credits and low home prices, many potential homebuyers are making the leap into homeownership. Purchasing a home will most likely be the largest purchase you will make, is a big step, so how do you know if you are ready to take that leap and become a homeowner? Below are some things that you can consider when making the decision

• You are on the right track if you maintain a budget and are able to stick to it. If you have your finances in order that is the major first step. in becoming a homeowner, especially in a difficult economy that can be financially challenging. Having good money-management skills are a must-have so that when you do own a home you will be able to have a smooth financial flow for monthly home expenses.
• Saving is hard, especially in a struggling economy, but if you are able to save and have a sizable down payment of at least 20%, you are on the right path. Keep in mind that with a downpayment of at least 20%, you will start out with having some equity. There are options out there for zero or low money down loans but if you have to sell your home before you expect you can potentially loose money and you will also need to pay for PMI (priviate mortage insurance).
• Because a mortgage is a large monthly commitment, It is important to have a steady source of income. We all know that these days there is no real thing as job security but when you buy a home you are going to be required to have a reliable source of income to cover not only mortgage payments but all the other monthly and unexpected expenses that come along with homeownership. It is important to look at how stable your source of income is as well as having an emergency savings fund where you will have enough funds to cover these expense in case of a loss of a job or other emergency.
• Your debt and credit are clean. Having a good credit score will help to not only get a home loan but will also get you a lower interest rate on your mortgage. Hold off on any large purchases such as cars before applying for a loan as this could effect your rating. Also review your credit report for free at annualcreditreport.com before even applying for the loan to check for any errors.
• In addition to the financial aspect of homeownership, you need to be sure you are ready for the other things that come along. Owning a home is a big responsibility, things like lawn care, upkeep as well as unexpected repairs need to be considered as part of owing a home. 

During the home buying process you will eventually need to obtain financing. This can be confusing and it can be easy to make mistakes, especially if you are a first time homebuyer. Below are some tips you can follow to avoid making some of the most common mortgage mistakes.

1.Do your research on the different mortgage options. You want to make sure to select the right financing for you and not one that will hold you down for even a short period of time with the wrong mortgage. It is vital to investigate all your options, then crunch the numbers and weigh your options.  Be sure to look at initial interest rates, future interest rates and payments (if different), and the possibility of prepayment penalties.

2. Avoid excessive credit. Having too much credit is almost as bad as having bad credit. Lenders will focus on this even if you pay your bills on time and you could get turned down for a mortgage. Postpone any big ticket purchases until after you buy your house.

3. Be truthful on your loan application. While this may seem like a no brainer, even if you exaggerate your income slightly or stretch the truth on other questions, it is a federal offense. While it is rare that you would get arrested, it can cause big problems down the road if the lender finds out. Lenders they can call your loan due and payable. Remember to never sign your name to a loan application that is not completely filled out, you will be held responsible for anything on the application.

4. Not fixing your credit. Even before you even think about applying for a mortgage, obtain copies of your credit report and your FICO credit score. Your FICO score is the three-digit number that's used in 75% of mortgage-lending decisions. Dong this at least six months in advance should give you plenty of time to correct any errors on your report and ensure that they're removed by the time you're ready to apply for a loan.

A "piggyback loan" is a home financing option in which a property is purchased using more than one mortgage from two or more lenders. While there are many variations, the piggyback loan, also known as the 80-10-10 loan can typically be defined as a 10 percent second mortgage coupled with a traditional 80 percent first lien and a 10 percent down payment, hence the 80-10-10. But this type of a loan can be mixed in different variation to make up the difference between a conventional loan and almost any amount of down payment. Other examples are an 80-5-15 or the 80-20 loan.

A piggyback loan is basically a second mortgage given at the time of a home purchase or a refinance. This type of a loan allows the home buyer to acquire or refinance a home with less than a 20 percent down payment or equity. An advantage to this type of loan is that the homebuyer does not need to carry private mortgage insurance (PMI). 

Homebuyers can also use piggyback loans as a source of funding for making a bigger downpayment on the new home. Homeowners who don't have the funds to make the 20 percent downpayment can use this loan to their advantage because private mortgage insurance can be expensive and is not tax deductible. 

If you have made the decision to sell your home and are wanting to make some improvments, you should know which room to put your most effort into. According to Remodeling Online’s 2005 Cost vs. Value Report, your best bet is the kitchen. Even a minor kitchen remodeling project will return an average of 98.5% of its cost when it comes time to sell the home.

If your want to update and freshen up your kitchen but a complete remodel is not in the budget, consider these below kitchen fixes to help sell your home faster and for more money:

1. Paint or re-stain worn wood cabinets.

2. Install cabinet hardware. Stay with simple and neutral hardware, avoid large clunky designs.

3. Remove outdated or busy wallpaper and any bold, bright paint. Stick with neutral colors.

4. De-clutter all counter tops, keep them free and clear of appliances, butcher blocks and knickknacks.

5. Update the faucets. New faucets can make a outdated sink look revitalized. Faucet replacements are also fairly inexpensive and simple plumbing projects with all of the parts available at your local hardware store.

6. Remove photos, calendars and personal effects from the refrigerator door.

7. Updated and simple rugs and towels with a splash of color can bring warmth to a kitchen.

Replacing outdated appliances and flooring are great improvements that should be considered but may not always be part of your budget. Keeping a kitchen clean and maximizing space is key to getting buyers interested. Always remember to keep garbage cans, and pet bowls etc. out of sight.

Looking outside today ... gray skies, intermittent snowflakes and semi-sleet accumulated into a pretty white wintery picture.   For those selling their homes or those looking at them, this is not a wonderful environment.  There's nothing like driving up to a property, excited customer in tow, to find that the lovely white stuff has amassed into at least an ankle-deep pristine pathless carpet with no way to the door but right straight through it.  Only the most adventurous and determined of agents and clients will brave the task and abandon their comfort and safety.   So to increase your odds of not inadvertently turning interested people away at the curb, make sure to clear those driveways and paths directly to your engaging front door.  That welcome is a subliminal good will message that will pay off in a good first impression ... that one time opportunity to make a positive impact from the start.  If you want to check that weather report, just in case, you can check your area at www.weather.com!

When purchasing a home, part of the process to complete the sale is when the potential homeowner will enter into escrow. Many first time homebuyers have many questions about the escrow process. Below are some clarification and information on this important process. 

What is an escrow?
An escrow is an arrangement in which a disinterested third party, called a escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions. The escrow becomes the depository for all monies, instructions and documents pertaining to the purchase of your home.

How does the escrow process work?

The escrow is a depository for all monies, instructions and documents necessary for the purchase of the home, including  funds for the down payment, lender’s funds and documents for the new loan. The duties of an escrow holder include: following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with instructions; paying all bills as authorized;  closing the escrow only when all terms and conditions have been met; and, distributing the funds in accordance with instructions.

Do I need documentation?
Receipt of your deposit is generally included in your copy of your purchase contract. Your funds will then be deposited in your separate escrow or trust account and processed through your local bank.

What information will I have to provide?
Typically you will be asked to complete a statement of identity as part of the necessary paperwork. Because many people have the same name, the statement of identity is to identify the specific person in the transaction through such information as date of birth, social security number, etc. This information is kept confidential.

How long is the escrow?
The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. Typically an escrow often takes an average time of 30 to 45 days.

When does the escrow process end?

The escrow process ends when you actually close on the home, during the closing procedure. This is when all funds are transferred accordingly, when all documents are signed, and when you get the keys to your new home.

It is a known fact that when you purchase a homeyou will have many different expenses related to the sale. It is important to know as well that when you sell your home, you will also have expenses that will be required. Below is a list of some of the most common costs that come with selling your home.

Closing Costs: Although most of the closing costs are the responsibility of the buyer, the seller is expected to pay the property taxes and insurance up to the date of the closing, even if they're not due yet. in addition, some buyers will ask the seller for help with other closing costs as part of the negotiations.

Realtor Commission: Typically there's a 4 percent to 7 percent commission on the sale price of the house if you opt to go with an agent. Usually this rate is between 5 percent and 6 percent, so be sure to account for this cost when pricing your home and figuring up your expenses that come with selling your home.

Home Inspections: Although the buyer pays for the home and pest inspections, it's a good idea to get your own inspection before putting your house on the market. This way you're aware of any hidden problems before selling.

Legal expenses: Even if you are using a real estate professional and not selling your home yourself, you still may want an attorney to examine the sales contract and assist with closing, which can be complicated.

Prepayment penalty: Many mortgages have prepayment penalties if you pay off the mortgage early. Be sure to examine your mortgage agreement and read the fine print.

Many homeowners are not aware of the costs involved with selling a home but there are some perks as well. With any home sale you are eligible for a tax write off of up to $250,000 gained in the sale of your home for a single owner, and $500,000 for married couples. This applies for most state taxes as well; check with a tax professional to get all the details of any tax credit that may be available to you and your situation. 

Many new home buyers are surprised to find that when they go to closing to finalize the sale, that the costs to close were more than they expected. Unfortunately, the Good Faith Estimate that tells the buyer an estimate of the fees associated with a mortgage loan due at closing, is exactly that – an estimate. Many times these costs increase by the time the buyer gets to the closing table without warning.

There is good news for homebuyers, as of January 1, new federal rules adopted by the Department of Housing and Urban Development took effect. The new rules will implement a redesigned, simplified Good Faith Estimate form to help buyers avoid those closing-table surprises.

Until now the way lenders would provide the borrowers with the estimated fees was complicated and confusing. Under the new rules lenders will all be required to use the same form for their Good Faith Estimates – a three-page document issued by HUD.

There are also new rules that will put a cap on the increases in costs that are indicated on the Good Faith Estimate and guidelines so that fees listed on the initial estimate reflect the actual cost at settlement.

Neighborhood Watch is one of the oldest and best-known crime prevention concepts in North America. The National Sheriffs' Association (NSA) created the National Neighborhood Watch Program in 1972 to assist citizens and law enforcement. In 2002, the NSA in partnership with USA Freedom Corps, Citizen Corps and the U.S. Department of Justice launched USAonWatch, the face of the revitalized Neighborhood Watch initiative, which represents the expanded role of watch programs throughout the United States.

This program empowers homeowners to become active in protecting their community through participation in Neighborhood Watch groups. Residents participate in Neighborhood Watch in their area by organizing residents to communicate any suspicious behavior to others by phone trees and reporting it to the authorities.

If you are interested in starting a neighborhoood watch in your community, below are some steps to help you get started!

• Form a small planning committee of neighbors to discuss the needs of your community, gage the level of interest and potential problems, decide on a date and place for an initial Neighborhood Watch meeting
• Contact Your Local Sherrif's Office or Police Department for more information or to arrange a speaker
• Arrange a meeting location close to your neighborhood. It should have enough room to hold your invited neighbors and, if needed, for the use of audio visual aids such as an overhead projector.
•  For more information and educational materials related to starting a Neighborhood Watch, visit the National program's website.

There are many different types of loans available but if you already are a homeowner and need to purchase a new home, a bridge loan might be for you. Also known as a swing loan, gap financing, or interim financing, this type of financing is a short term loan that a homeowner takes out against their current property to finance the purchase of a new home.  When a home buyer is buying another home before selling an existing home, two common ways to find the down payment for the move-up home is through financing either a bridge loan or a home equity loan (or home equity line of credit).

Generally, a home equity loan is less expensive, but bridge loans contain more benefits for some borrowers. In addition, many lenders will not lend on a home equity loan if the home is on the market. It is a good idea to compare the benefits between the two loans to determine which is a better fit for their particular situation and plan ahead before making an offer to purchase another home.

How Do Bridge Loans Work?

When applying for this type of a loan, you must be able to prove to the lender that you are you are financially able to pay both mortgage payments in case the primary property does not sell right away. To ease the transition, most bridge loans will allow you to have a few months before your actual first payment is due. However, interest will accrue during that time.

Bridge loans are meant to be short term loans, normally coming due in a year or upon the sale of the primary property. Because it is a short term loan, the interest rates are usually quite a bit higher than regular mortgages and there are fees associated with it.

Benefits of a Bridge Loan

• A bridge loan is a great solution if you want to purchase another home without having to sell your current property.
• The buyer can immediately put a home on the market without restrictions.
  Bridge loans may not require monthly payments for a few months.
• If the buyer has made a contingent offer to buy and the seller issues a Notice to Perform, the buyer can remove the contingency to sell and still move forward with the purchase.

Cons of a Bridge Loans

• Bridge loans cost more than home equity loans.
• Strict lending requirements. Buyers must be qualified by the lender to own two homes and many will not meet this requirement.
• If the buyer is unable to sell their primary property, they will have to pay 2 mortgages and risk foreclosure on the 1st.

As with any loan option it is a good idea to look at both the pros and cons and consider all your options. If you think a bridge loan might be the solution for you, check out this Bridge Loan Calculator to see an estimated idea of payments.

Bridge Loan Calculator  http://www.1stbridge.com/calculator.aspx