Category Archives: downpayment assistance

Questions to ask when choosing a mortgage lender to buy a home.

When deciding to buy a home, the first step is getting preapproved. With so many mortgage lenders out there, how do you choose? Many home buyers who come to me say the same thing. I just called my bank to get preapproved…they have all my information and my car loan…

Banks who are good for checking accounts or even car loans are not always stellar at mortgages, which are riskier and more complicated transactions. The right mortgage lender can be the difference between getting or not getting a home. In a competitive market where the right homes are going into multiple offers, listing real estate brokers and there sellers may evaluate offers, including which lender will get the job done. If lenders have a bad reputation, it can hurt your offer. And the wrong mortgage lender can definitely cost you a lot of time, heartache and money if they do not get the job done.

Beware – rates are not everything. Mortgage companies that cloak themselves in the best rates are not often the best to deal with. If they can’t get the job done, it won’t matter what their rate is.

So here are 6 questions to ask a mortgage lender to see who will get you into your new home.

1. What do I need for a preapproval letter? If they don’t ask you for tax returns, w2, bank statements and proof of employment income right from the start….and pull your credit report…your preapproval is not worth anything and will be worthless to a listing broker with an offer. Sellers want to know the loan will go through and so do you. They need all this information to ensure you will have a successful loan.

2. Do you do your own underwriting locally or in your office? Underwriting is the key to all loans. Underwriting is where they look at all the documentation and ensure the company/investor is satisfied with a minimal risk of default on the loan. This is very complex and involves a lot of precision but also a lot of subjectivity. If the underwriters are with another company or in another state or even another office, the loan officer will be powerless if anything is tricky with you or the house to ensure the loan gets done.

3. Who do I deal with during the loan process? Service counts for a lot. Companies where you deal with multiple people in multiple locations, states, etc. usually will delay your loan and cause you more hassles. You want a team where the loan officer, the person you start with is still involved and still your point of contact for you, your Realtor and your attorney. Companies who have you talking to a different person every time will just give you a headache and waste a lot of your time. Internet companies are famous for this, you often are pushed from person to person.

4. What are your loan fees? Of course you want to know what the loan will cost you. But just like rate, you should ask the question (and get it in writing) but that should not be the only factor considered.

5. What loans can you do? Not all banks, mortgage companies and credit unions can perform all mortgages. Renovation loans, FHA loans, various grants and programs loans with home buyer assistance at local or state level…if you are looking for a particular loan product or a few, you want to know they can do the job in house and not send out for underwriting and processing.

6. How many of your deals go through? This is a very important question. Some loan officers are salaried (many banks) while mortgage companies typically are strictly commission…they don’t eat if they don’t close loans. If they could care less if you close or not and merely are fulfilling a quota of preapprovals or applications…they are likely not the lender for you. And lenders who don’t close at least 90% or more of all loans they submit preapprovals for…that is a red flag.

What you need to know about using an Attorney in a Real Estate Closing

Many of my clients ask if they have to use an attorney when buying or selling a home. While the answer is no you don’t have to but you need to use an attorney when buying or selling a home and here is why.
1. Who is going to explain all the paperwork to you at the closing? By law in Illinois, only an attorney can explain the mountain of paperwork from the mortgage note to the deed to the closing charges to ensure that you are getting what you paid for and that you understand everything you are signing. So unless you want to just sign a bunch of papers you don’t understand, you need a real estate attorney there with you when signing.
2. If you are selling property…there are a myriad of paperwork that needs to be completed for transfer taxes and there are documents to be reviewed like the title, survey, deed. If you don’t understand every word and paragraph, how do you know it is completed properly? How do you know that your error will not put you in future litigation?
3. Dealing with the other attorney…In Illinois, most sellers use an attorney, so if you are a buyer, you would have to deal directly with the attorney on everything, inspection repairs, extensions, title problems and review? While these things are not rocket science they do require a level of knowledge and experience to be successfully achieved. If the other side has it and you don’t…you are putting yourself at a disadvantage.
4. Are you sure you are protected and getting what you are entitled to? Buying and selling a home is complicated. The deed and title need to be reviewed to ensure there are no liens. The survey needs to be reviewed. Real estate taxes and exemptions can expose you to paying more taxes out of pocket than necessary. A real estate attorney will review all these items and protect your interests now and in the future.
5. Make sure it is a real estate attorney who has experience in real estate. You would not have a cardiologist perform brain surgery. Both doctors, but specific knowledge and experience are required. Same with attorneys, there are nuances that only attorneys who practice in real estate will know and recognize. This could be the difference between preventing or solving a problem or something you will have in the future.
6. Where do you look for a real estate attorney? Your Realtor and/or lender are great resources. They work with attorneys every day and can give you a personal recommendation. Then you should talk to them and ensure you feel comfortable with them. It is important that you feel comfortable asking questions and ensure they have time to help you and will communicate with you.
7. What should I expect from my attorney? Some attorneys are the “just see you at closing types.” You are better off with someone who is with you every step of the way, not just on the day of closing. They should review all the paperwork, communicate with the Realtors, lender, title company and other attorney. They should answer all your questions and keep you up to date. They need to protect your interests and do what is best for you. And they should work well with all the parties involved to make a smooth transaction. If they seem difficult to work with, they are likely not the right choice. Real estate transactions have a lot of moving parts, all parties need to work together to ensure a smooth and successful experience. And keep in mind, while an assistant or paralegal can do a lot of the paperwork, they should not be the one answering your questions and explaining paperwork. That is what your attorney is for.

8. What should you pay for a real estate attorney? You usually pay a flat fee, not by the hour, phone call or retainer for a real estate transaction. It is paid at closing. You can negotiate the fee, especially as the seller of the property, but again it is more important to get a good attorney than save a few bucks.

Simply said. You don’t know what you don’t know. In every industry there are experts that people rely on to protect, educate and inform them. Doing it yourself you could miss something that will cost you money, hassle and more in later years. Unless you understand all the paperwork and laws…get an expert. After all, this is not only your home, but your largest investment.

Millennial Buyers – How to Live for Free

I blog a lot about Millennials because they are very important to every aspect of our economy and housing recovery. One of the millennial trademarks that is unique to this generation is the “boomerang” or “failure to launch” effect of millennial graduates moving back in with mom and dad.

Let’s face it, after the taste of freedom in college, living with your parents as an adult is a little awkward and can be difficult to conduct your life on your terms and spread your wings.

It can have the same difficulties to your parents who don’t keep the same nocturnal calendar as their adult children and are tired of having to tell an adult to pick up their things.

To solve all of those problems and plan for the future, several of my millennial buyers have come up with a new idea that I am calling the Millennial Boarding House.

Instead of living with mom and dad, this formula can be used by smart millennials who don’t want to waste money on rent and want independence. You can be a first-time buyer and create an investment nest egg to move up in the housing market, get government grants and most importantly LIVE FOR FREE. Here is how it works….

1. Use your good credit rating and income to qualify for a nice starter home that has a good price, good area, good schools and is in an accelerating and not a declining area and has potential for future resale. You can do some work updating it if you like or not. The idea is good for now and easy to sell in the future. There are still deals out there and we are in an accelerating marketplace. Interest rates are good. Waiting will cost more.
2. Use government grants through the @Home Illinois program to get $5k in free down payment and/or closing costs.
3. Find a few friends to be roommates and charge them a few hundred dollars each month. Cheap for them and they get independence from their parent’s house or basement.
4. You can live for Free. If you have two or three extra bedrooms, you can charge friends enough to cover your monthly payment and you pay nothing or next to nothing each month to live.
5. You save money by not having to pay anything each month to live, building your nest egg for the future.
6. In a few years when you are ready to get married or start a family, you sell the house for a profit and a nice down payment on your first family house. Or, you keep the house as an investment and rent it out for future income.

There it is, an easy formula for success to start saving money, not waste money on rent and plan for the future. Do yourself a favor and call a Realtor – call me – and get on the path to future equity and success.

Downpayment Assistance Programs Make it Easier to Buy A Home in Illinois

What can you do if you don’t have enough down payment or closing costs to buy a home? You can buy a home with $1,000 or less. Here are some assistance programs offered by the Illinois Department of Housing Authority (IHDA). All these programs require that the home be purchased and used as a principal residence for at least 2-3 years. And for many of these downpayment assistance programs, you do not have to be a first-time buyer.

I have heard people say – what’s the catch or I wouldn’t qualify. You need to meet minimum credit score and income eligibility requirements, but you just never know. These programs are designed to get people to buy homes, and often the income requirements meet many people. If you can get the money, why not take advantage of it? Or at least find out?

Several towns in Illinois, including Park Forest, South Holland, Chicago Heights, Lynwood, Lockport and Crest Hill, are eligible for the Illinois Building Blocks Grant which provides $10,000 towards down payment, closing costs and reduction in purchase price to buy a home. There are income MAXIMUMS between $90-107,000 and you need to qualify with credit score and income to get a loan. You DO NOT have to be a first-time buyer. The home has to be vacant, move-in ready and only in one of the selected towns.

Smart Moves is a downpayment assistance program available to first-time buyers only to buy a home. You can not have owned a home in the last 3 years to be a first-time buyer. This offers $6,000 in down payment and closing costs. Again, the home must be move in ready and anywhere in Illinois.

There are also programs for property tax relief through state income tax credits for 30 years (the life of your loan). This one is for first-time buyers only and usually is only available at the beginning of the year as funds run out on that one towards the middle of the year or earlier. These other programs, however, do have plenty of money available.

Illinois Veterans can take advantage of two homeower assistance programs to find an affordable way to buy a home. VA loans offer a no money down and no private mortgage insurance option. You need to qualify for the home by income and credit and have a DD214. No income maximums. The home only needs to be move-in ready. The Welcome Home Heroes program provides a $10,000 grant for any town to cover closing costs and downpayment. You need to contribute 1% or $1,000 toward down payment. And you DO NOT have to be a first-time buyer to buy a home with this program.

Not all lenders have the ability to loan a home on these programs but many do. I work with lenders who do offer these programs. If there is a will, there is a way to buy a home. Downpayment assistance to buy a home through grants like this are ready and waiting for you.