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

In a recent article, Realtor.com featured 10 top "green" cities that put clean air, clean water, renewable energy and green public transportation first. Chicago was on that list!

Chicago offers it's residents renewable and sustainable energy as well as a commitment to improve the standard of living. Our city also has 42 green-certified building projects, with more to come.

Eventhough Chicago is already green, the city aspires to improve even more and hopes to buy 20 percent of its electricity from renewable energy sources this year. Local officials also will offer tax incentives to homeowners who invest in Chicago’s many historic homes and retrofit them with energy efficient heating and cooling systems.

Tourism is also "green". Many people are unaware that all of the city’s nine museums and the Art Institute of Chicago have been converted to run partially on solar power. Boaters and swimmers who enjoy the city's lakefront will be happy to know that the water quality is rated as excellent by the Natural Resources Defense Council.

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.

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.

The process of purchasing a home can be overwhelming if you are not familiar with all the steps and costs involved in a real estate transaction. The most common costs that tend to be overlooked by buyers and sellers are a bundle of fees called closing costs.

It is important to be aware and budget for these costs so you are not surprised on closing day and possibly fall short within your finances.

Below is a guide to some of the more standard costs that you may be faced with on closing day.

• Loan Origination Fee or Points
  Fees charged by the lender for generating your loan.
  
• Broker Fee
  These fees are occasionally combined into the Loan Origination Fee.
  
• Credit Report
  Lenders may require this fee up front to obtain and review your credit history. (Approx. $21 - $60)
  
• Appraisal Fee
  This fee is normally non-refundable and will vary depending on the value of the home.
  
• Inspection Fee
  Fees paid to have a Certified Home Inspector evaluate the structural and mechanical condition of the home.
  
• Title Search
  This search will provide verification that the seller owns the house you are buying.
  
• Title Insurance
  This fee insures against losses as a result of any title defects.
  
• Prepaid Interest
  To pay up the mortgage interest to the first of the following month.
  
• Mortgage Insurance
  Insurance to protect the lender in the event that the borrower (mortgagor) is unable to repay the loan.
  
• Administration Fee

Your real estate agent will be able to give you a rough estimate of some of these costs, however once you have applied for your loan, the lender will provide you with a Good Faith Estimate of what they anticipate the closing costs to be.

Familiarize yourself with these terms, ask your real estate agent questions and budget for these fees on closing day.

For more Home Finance information, visit my Finance Information page or Contact Me should you require additional information.