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

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The Truth About Home Prices as Interest Rates Rise

by Allyson Hoffman

Interest rates have begun moving upward, a new concern to buyers currently searching for a home. Understanding how increasing interest rates impact the price of the home will help to determine the time to buy and how much house buyers can afford.

How Interest Rates Impact Affordability

Lower interest rates reduce the overall amount paid for a home and the monthly financial obligations. Since payments directly tie to the loan amount and therefore, the amount a buyer can be approved for, any change in interest will inevitably make a substantial difference in what type of home is affordable and potentially affect a buyer’s ability to find the house of their dreams.

For example, consider a $300,000 house mortgaged with a 4% interest rate and a loan term of 30 years. Presuming a 20% down payment ($60,000) and a loan amount of $240,000, monthly principal and interest payments would be $1,146.00. If that interest rate increased by even one percent to 5%, monthly payments would correspondingly rise to $1,288.00. This payment, based upon the higher interest rate, is nearly equal to the payments a buyer would be making if they had paid $330,000 for the same home mortgaged at 4% -- or a whopping ten percent increase in the price.

While a buyer may be comfortable affording the extra $142 per month, their lender will need to approve the loan for the higher amount as well. Depending upon a buyer’s debt-to-income ratio, this may be feasible or not.  So if you are looking at the top of your budget range, even a $100 increase in your payments could mean the difference between approval and rejection. Assess your basic payment information with online mortgage calculators.

How to Deal with Rising Interest Rates

For those actively in the market to buy a home soon, now is the time to act before rates rise further. Lower interest rates and home prices make purchasing a property more affordable.

One way to increase affordability and purchase a home priced near the top of your budget (or just over) is to pay points on your loan. Points are determined based upon the amount of your loan with each point equaling 1% of your mortgage balance. Points are treated as prepaid interest on your loan and thereby can reduce the rate offered, the associated payments required and thus, the affordability to the borrower.

In summary, when shopping for a home and selecting the right financing, pay attention to both the interest rate and the price of the property. This will help to ensure that you choose a property that fits your needs and financial capability. For additional information on the buying process or recommendations to trusted lender professionals who can assist you in determining how much you can borrow, please contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you find your dream home.



Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets. 
  

Image courtesy pixabay.com

May 2017 Midwest Real Estate Market Reports

by Allyson Hoffman

The May 2017 Midwest Real Estate Market Reports are now ready for your review. These market reports provide an insight on the real estate market statistics for Cook County and Lake County. These statistics are helpful when you are considering buying or selling in today’s real estate market.  And, remember should you need tailored reports on a subdivision or neighborhood in the North ShoreNorth, and Northwest Suburban Chicago, Illinois area, please let me know.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager 
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Understanding HOA Fees

by Allyson Hoffman

If you’re considering buying a property located in a homeowner association, you will have to deal with HOA fees. For people moving out on their own for the first time or moving from a traditional home to a property with an association, understanding what these fees do and why they are necessary is important.

One-Time Capital Contribution

Some HOAs require new owners to make a one-time payment into the association coffers upon their purchase of the property. This money is kept in a reserve account to cover future expenses, such as adding amenities or updating certain common areas. This fund may be used to make exterior repairs or improve landscaping. Sometimes, when an association requires a one-time payment, the monthly fees are lower.

Monthly HOA Fees

Many associations charge a monthly fee to cover certain ongoing expenses that benefit all residents. Some examples include the following:

 ·  Building maintenance
·  Utility costs for common areas
·  Trash pickup
·  Snow removal
·  Ongoing landscaping such as mowing or trimming
·  Pool maintenance
·  Maintenance of other common areas
·  On-site security
·  Lighting and signage for common areas

While owners not responsible for this type of actual work, they must pay their portion of the costs.

Comparing HOAs

It can be difficult to compare costs for HOAs because they are not all alike. For instance, one association may have a pool, exercise facility and/or common meeting room while another one may have none of these. The costs will differ because the two HOAs will need to maintain and provide different services.

Location  can also play a role in determining the cost of fees. For example, an older association with dedicated neighborhood streets maintained and plowed by city services may have lower fees than a home within an up-and-coming new construction area where roads are private and maintained by the association. Associations, regardless of age, with non-dedicated roads will bear the expense of care through their HOA fees.

The age of the association and its improvements may also impact the monthly fees.  Newer or new communities, possibly still covered by builder warranties, may not require the same level of reserves needed in older associations where roofing, concrete, fencing and building exteriors inevitably will need attention as the years progress.

Keep in mind that it’s always important to factor HOA fees into your budget when you are shopping for a home to ensure it matches your financial criteria. Your real estate agent should be able to help you determine what areas are owner responsibilities and what services are included in the monthly fees.  This information will help you to equitably compare associations to ensure you select the right one. For additional information on selecting the right property in the right association for you, feel free to contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you find your dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.    

Image courtesy skeeze/Pixabay.com

 

The Reality of How Increased Interest Rates Impact the Price of a Home

by Allyson Hoffman

Interest RatesInterest rates have begun moving upward, a new concern to buyers currently searching for a home. Understanding how increasing interest rates impact the price of the home will help to determine the time to buy and how much house buyers can afford.

How Interest Rates Impact Affordability

Lower interest rates reduce the overall amount paid for a home and the monthly financial obligations. Since payments directly tie to the loan amount and therefore, the amount a buyer can be approved for, any change in interest will inevitably make a substantial difference in what type of home is affordable and potentially affect a buyer’s ability to find the house of their dreams.

For example, consider a $300,000 house mortgaged with a 4% interest rate and a loan term of 30 years. Presuming a 20% down payment ($60,000) and a loan amount of $240,000, monthly principal and interest payments would be $1,146.00. If that interest rate increased by even one percent to 5%, monthly payments would correspondingly rise to $1,288.00. This payment, based upon the higher interest rate, is nearly equal to the payments a buyer would be making if they had paid $330,000 for the same home mortgaged at 4% -- or a whopping ten percent increase in the price.

While a buyer may be comfortable affording the extra $142 per month, their lender will need to approve the loan for the higher amount as well. Depending upon a buyer’s debt-to-income ratio, this may be feasible or not.  So if you are looking at the top of your budget range, even a $100 increase in your payments could mean the difference between approval and rejection. Assess your basic payment information with online mortgage calculators.

How to Deal with Rising Interest Rates

For those actively in the market to buy a home soon, now is the time to act before rates rise further. Lower interest rates and home prices make purchasing a property more affordable.

One way to increase affordability and purchase a home priced near the top of your budget (or just over) is to pay points on your loan. Points are determined based upon the amount of your loan with each point equaling 1% of your mortgage balance. Points are treated as prepaid interest on your loan and thereby can reduce the rate offered, the associated payments required and thus, the affordability to the borrower.

In summary, when shopping for a home and selecting the right financing, pay attention to both the interest rate and the price of the property. This will help to ensure that you choose a property that fits your needs and financial capability. For additional information on the buying process or recommendations to trusted lender professionals who can assist you in determining how much you can borrow, please contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you find your dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

Get your latest Home Value
Receive Your Personalized Listing Alerts

Let’s Connect, Socially!

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.    

Image courtesy pixabay.com

Down-Payment Requirements

by Allyson Hoffman

The days of zero-down mortgages are virtually a thing of the past and unlikely to make a return any time soon. In the current lending environment, potential homeowners are encouraged to save as much down-payment as they can before approaching a lender and requesting a loan. But, is it really necessary to save a 20-percent down-payment? Consider the advantages and disadvantages of a larger down-payment:

Advantages

Approval. For those prospective borrowers with past credit problems, a significant down-payment could make the difference between being approved for a loan or denied. Lenders generally look favorably on those who can afford to make larger down-payments with 20-percent down-payment borrowers more likely to be approved.

Lower Payments and Interest Rates. For those willing and able to tender a 20-percent down-payment, slightly lower interest rates may be available. The difference of a few hundred dollars a month could potentially improve a new homeowner’s quality of life and additionally lower overall stress levels. Larger down-payments typically mean smaller debts and lower monthly payments.

Private Mortgage Insurance. PMI (Private Mortgage Insurance) is a way for lenders to reduce risk when owner equity is low and lender investment is high. It also helps mitigate against possible foreclosure. Eliminating the added PMI expense required when down payments are under 20-percent of the home’s appraised value can save borrowers thousands.

Disadvantages

Tied-Up Capital. If you prefer that your money works for you rather than having it sit in the bank, tying up a large amount of your available capital in a home could mean missing out on potential investment opportunities – and when those opportunities yield a higher rate of return on your money than the cost of borrowing those funds, it may be better to retain funds for investment.

Time.  For many Americans, saving for a down payment can take a significant amount of time, possibly years. If, for example, the average price of a home in the United States is roughly $200,000, a 20-percent down payment would require $40,000. Depending upon the area’s rate of appreciation in home values relative to the time needed to save those funds, it may be more prudent to buy with a lower down payment now than lose out on the more rapidly increasing value of your home than the time it takes to save the additional funds.

In the end, each individual or family’s situation is different and each must determine the size of their down payment based upon their own financial circumstances.  To make the best decision, enlisting the aid of trusted professionals is certainly recommended including financial experts, mortgage lenders or an experienced real estate agent. For recommendations on trusted mortgage lenders or to set up a consultation, feel free to contact me today. I will be happy to answer any questions you may have, and/or help you find your dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.   

Photo courtesy Flickr.com/401kcalculator.org

New Integrated Closing Disclosure Rules

by Allyson Hoffman

Homebuyers, your life just got considerably less stressful related to obtaining a mortgage and closing the transaction on your prospective new property. Long considered a truly complicated aspect of the real estate transaction, closing has typically been fraught with potential pit falls and confusion for buyers. The financial dynamics and government paperwork requirements of the real estate market have made it inherently so.

Recent changes, enacted as of October 3, 2015, have sought to simplify this otherwise complicated and confusing process! The new TILA-RESPA Integrated Disclosure rule introduces two new government forms (down from the prior four), the Loan Estimate Form and the Closing Disclosure Form. Essentially, lenders must now provide buyers clear details regarding their loan terms three days after submitting an application.

The new Loan Estimate Form above details the terms of a potential loan including the amount, interest rate and whether the figures can change after closing.  This form makes it much easier to compare loan terms between lending institutions. It also includes payment projections, as illustrated by this additional snapshot.

The Closing Disclosure Form breaks down estimated closing costs, allowing the borrower to see what should be brought to closing and therefore, hopefully eliminates last minute surprises due to changes in loan terms and closing costs.

Important concerns to check include making sure that figures on both forms match since these numbers drive future payments for a considerable time. If figures have appreciably changed, be sure to find out why. All requirements concerning the property such as inspections, repairs, contingencies should be addressed earlier in the process.

Keep in mind that no changes can be made after three days prior to closing. This may surprise those who have formerly been accustomed to the “last-minute” nature of the closing process. For assistance in selecting a reputable lender who can further explain the new procedures, feel free to contact me today for a consultation. I will be happy to answer any questions you may have, help you sell your current home and/or find a new dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.   

Pros and Cons of a Bigger Down Payment

by Allyson Hoffman

In most cases, to purchase a home, a down payment is required. Except for VA loans available to US Veterans, the days of zero-down mortgages are, basically, a thing of the past. Even at the height of the real estate lending boom, lenders looked more favorably at borrowers who could afford some amount of down payment – and from the lender’s perspective, the bigger, the better, since it minimizes risk.

Today, future homeowners are encouraged to amass a down payment before approaching a lender to request a loan. Generally, down payments of 20-percent are looked at favorably but to assess how essential or beneficial that amount may be, let’s look at the advantages and disadvantages.

The Advantages of a 20-Percent Down Payment:

• More Likely to Be Approved. Lenders generally look favorably on those who can afford to make a large down payment. Homeowners with a significant amount of equity in their homes are less likely to miss payments. If you’ve previously had credit problems, a significant down payment could make the difference between being approved or denied.

• Eliminates the Need for Private Mortgage Insurance. PMI is a way for lenders to insure against a possible foreclosure. Unfortunately, until a 20-percent equity position is reached, borrowers are required to pay PMI. Eliminating PMI, can save thousands of dollars in mortgage costs.

• Lower Interest Rate. Those borrowers willing and able to tender a 20-percent down payment may additionally qualify for slightly lower interest rates. Even slightly lower rates can produce substantial long term savings.

• Instant Equity in Your Home.  A substantial down payment translates to instant equity in your home and that equity can potentially be leveraged in the future.

• Lower Payments. A larger down payment reduces the debt owed the lender. This produces lower monthly payments which may improve quality of life and reduce overall stress.

The Disadvantages of a 20-Percent Down Payment:

• Takes Time to Save. The average price of a home in the United States is nearly $200,000. To make a 20-percent down payment, $40,000 would need to be accumulated. For some prospective buyers, saving that amount could take years while homes of interest may sell or increase in price as the market changes.  Increasing prices may produce a cycle forcing borrowers to save even more.

• Large Amount of Capital Tied Up. For those who prefer to make their money work for them rather than just sit in a bank or be tied up in non-liquid assets, investing a large amount of your available capital up in a home might adversely impact ability to capitalize on other opportunities.

While it may appear that the pros of making a large down payment outweigh the cons, ultimately it is up to each individual to determine which approach is best suited to their situation. Amongst others, an experienced real estate agent can help you to make the right decision. Feel free to contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you find your dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.   

Image courtesy of Pictures of Money/Flickr.com

About Closing Costs …

by Allyson Hoffman

There are obvious costs included in buying a home -- from the price of the home and required down payment to the interest rate of the mortgage and additional expenses that are sometimes overlooked by first-time, and even experienced homebuyers.

One of these includes the closing costs associated with buying a home. Closing costs, a catchall category, covers various fees associated with closing a home such as running a credit report, processing fees, legal fees, inspections, appraisals, title searches and recording fees. Together, depending on the cost of the home, this can be a relatively significant amount.

Reducing Your Overall Closing Costs

While many closing costs are typically the buyer’s responsibility, there are ways to offset or split your closing costs.

In some cases, the seller will contribute to a portion of the closing costs.  To take advantage of this potential benefit, discuss with your real estate agent the possibility of splitting the closing costs so that it can be incorporated into any purchase offer you prepare. Then your agent will be able to determine the seller’s willingness to cover a portion of these charges in finalizing a contract with the seller’s agent.

Be careful of “no closing costs” mortgages offered by some lenders. While these seem may great, on the surface, be sure to review the fine print carefully. You may find that these fees are actually rolled into the structure of your loan and result in you paying much more than you otherwise might after factoring in the added costs. Your qualified agent, who likely understands loans and the mortgage industry better than most, can be a valuable resource in reviewing and helping you to make the best choices.

Save and Plan Ahead

The days of the zero-down mortgages are largely over, possibly with exception of qualified United States veterans whose benefits may include the option of a 100% financed government-backed mortgage on a home purchase. So to purchase a home, you will need to amass the funding for a down payment and associated closing fees.  At a minimum most buyers will need 5-10% for a down payment and a cushion to cover the closing costs noted here.  Additionally, keep in mind that you may also need monies for your move and possibly to purchase some new furnishings for your home.

To discuss these concerns more specifically, please contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you structure a personalized plan to start the home buying process.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.   

Solar Panels ~ Are They Killing The Deal?

by Allyson Hoffman

The pros and cons of Solar Panels were explored in my recent previous blog. How Solar Panels could affect you or your prospective buyer's ability to finance a home is reviewed in this insightful and interesting follow-up video, courtesy of The National Real Estate Post.  Tune In now for the details and hear the warning that may be worth considering as a part of an overall decision to embrace solar power or not.

 

 

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

Get your latest Home Value
Receive Your Personalized Listing Alerts

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Should You Buy or Rent?

by Allyson Hoffman

Trying to decide between buying or renting? There are several benefits to consider for each. Perhaps the most important decision to make is which one would be best for you financially. Everyone’s situation is different, so consider the following information when making your choice.

Buying: The Benefits

One major benefit to buying a home is avoiding the rising cost of rent. In recent years, demand has caused rental costs to substantially increase. In addition, several other benefits of buying include the ability to remodel your home, stability, tax deductions, and equity building, amongst others.

Renting: The Benefits

When renting, the property owner typically bears responsibility for maintenance and repairs – and these could be costly. As an owner/buyer, you will pay for repairs and also need to plan for costs relating to a down payment, mortgage, and closing costs that include title fees, insurance, and inspections. Though the cost of renting typically goes up every year, it can be less expensive and preserves your ease of relocating.

Tools to Help

Realtor.com offers this calculating tool to compare the cost of renting vs. buying over time. Additionally, you can also visit MortgageCalculator.org to help determine if buying or renting is right for you. Feel free to contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you find your dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
allyson@allyson.com

Get your latest Home Value
Receive Your Personalized Listing Alerts

Let’s Connect, Socially!

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy of NCinDC/Flickr.com

Displaying blog entries 1-10 of 65

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Glenview IL 60025
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