Tag Archives: financing a home

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.


Appraisals are a necessary component of getting any home approved for a loan when buying or selling a home. Cash deals do not require appraisals but loans, which comprise most home deals, DO require an appraisal which needs to be valued at least at list price.
Appraisals for buying a home and selling a home have both objective and subjective components.
Market value – Appraisers consider 3 of the comparable properties in the last 6 months against the selling home. Which comparables they use are subjective, but the comparables are objective. This is 80% of the appraisal value.
Adjustments – Similar home type, square footage, immediate area (subdivision or town), school district…these are the criteria generally used by appraisers to establish comparable properties, but minor adjustments can be made to ensure a fair appraisal when selling a home. Adjustments for finished vs. unfinished basement, number of bedrooms, number of baths, number of garage spaces ad whether attached or detached, type of siding on the home, age of the home, lot size, condition/upgrades, and whether or not a home is distressed (foreclosure or short sale) all can factor into an appraisal when selling a home. All these adjustments have guidelines, but the adjustments and the amounts are subjective. Upgrades and lot size usually take the hardest beating on these adjustments and never really get a real and true value. If you have an acre and other homes are subdivision lots, don’t expect the price of the lot itself to be accurate in the adjustment. It will be a fraction, mostly due to the flat vacant land market and difficulty in value. The same is true of exceptional upgrades. You may get a superior value, which will help, but it will not be the cost of what you paid. So, if your home is over-upgraded for your market, compared with similar homes, it will be a fraction of what you paid for the upgrades. This is usually around 10% of the appraisal value.
Condition – Totally subjective. Appraisers would not have seen other comparable homes, but can see pictures on the MLS. They assign a poor , fair, average or superior rating. This can affect 10-15% of the homes value. Also, if you have an FHA loan, there are some repairs that would be required to be done before the home can be loanable. This is subjective but also is

required by FHA requirements. These are all generally safety requirements. Roof condition, GFI outlets, etc.
Frequently asked questions about appraisals when selling a home.
If a neighbor with a similar home sells their house undervalue just to get out, will that hurt my homes’value? Yes, if it is not a short sale or foreclosure, there will be no adjustment.
If the house does not appraise, can the buyer pay extra to meet the agreed price? Sometimes, it depends on the lender and the type of loan. However, it is often difficult to convince a buyer that they should pay over value for a home. Also, they would need to have extra cash, since any payment over the appraised price would need to be in cash. Not the difference between the loan amount and the appraised value, but the appraised value and the purchase price of the home.
Who pays for the appraisal? The buyer
Does the seller get a copy of the appraisal? No, unless they are asking for a price adjustment as a result of the appraisal.
Does the appraisal amount stay with the home if a deal were to fall through? Possibly. If it is an FHA loan and the lender files the case number and the appraisal, then the appraisal – bad or good – will stay with the home for up to 6 months.
How to basements count toward assessed value. Whether finished or unfinished will count, however, walkout, lookout basements are still considered below grade, even if one foot is below grade. The square footage, qualified bedrooms and bathrooms will still only be counted at a percentage of their total worth as compared with above-grade.
So, it really doesn’t matter what you, your buyer, or the agents think of the worth of the house. It only depends how it stands up to similar homes in the area.

The RIGHT way to look at closing costs when selling a home or buying a home

Closing costs when selling a home or buying a home seem to always be a tug of war between buyers and sellers. Buyers think that sellers should include closing costs for them. A lot of times when I show younger people their parents or grandparents always tell them “they (the seller) should include closing costs.” Sellers often oppose the idea of including closing costs for buyers, often sellers say. “Why should I pay their closing costs. If they can’t afford closing costs, maybe they shouldn’t be buying a home.” The truth is both parties are wrong. When selling a home or buying a home, closing costs become just part of the equation to make the deal happen. However, the way to look at it is not seller concessions or seller paying the closing costs…it should be seller allowing the buyer to finance their closing costs by making it part of the deal.

Many buyers need the closing costs to make the deal happen. There are a lot of people who just are not savers any more. They may good money but the down payment is about as much as they can do. But buyers need to realize that the seller doesn’t owe them anything. And while every thousand dollars costs a buyer $5 dollars a month in monthly payment, $1,000 dollars is a $1,000 to the seller.

Sellers need to realize that they don’t get to decide who gets to buy a home or who does not get to buy a home. Sellers should not care who is buying and what their financial situation is, as long as they are approved to buy the home and will get the loan and offer an agreeable price.

When buying a home, you should consider financing your closing costs. It can help you get into a home and use your savings for down payment or improvements to the home, moving, etc. it all takes money and if you can finance the closing costs, it can cost you only a few dollars more each month.

When selling a home, you should consider the request to “pay” buyer closing costs as allowing the buyer to finance their closing costs. It does not affect your net. As long as you are getting the amount you want, what do you care if they include the closing costs in their mortgage?

I often negotiate my deals based on the net to the seller. Don’t include closing costs in the initial negotiation, but let the other party know you intend to add the closing costs to the deal once a net to the seller price can be agreed upon. That way it is not an emotional or adversarial issue for the buyer or the seller. It is a non issue and you can focus on the price – bottom line to the seller.

The only time this becomes an issue is when the appraisal does not meet value. Then it becomes a little sticky. Appraisers are supposed to consider the closing costs paid on the contract, but sometimes they don’t and the closing costs become a pawn in the renegotiation.

When buying a home, buyers need to understand that sellers are entitled to get at least the value of the home, as appraised. Remember, appraisals are not always true to the real value of the home. It is based on the recent comparables, so sometimes the home’s value is more, but it is suffering from lack of comparables or neighbors who are giving away homes to get out.

Home Sellers need to understand that appraisals may or may not be indicative of the true value of the home, but the current market value depends on the comparables, nothing else. And while sometimes, the buyer can come to the table with money above the appraisal, sometimes they don’t have that extra money. And often it is difficult to get a buyer to pay above the appraisal price.

Closing costs need to be considered by both parties as a part of the deal and means to the end to make negotiations go smoother.

Buying Foreclosure Homes Reality vs Myth

You know the old saying, if it seems to good to be true – it probably is. This is very appropriate in buying foreclosure homes. I get calls all the time from people who are searching on the internet who are looking to buy foreclosure homes for very low cost $1, $10k, $20k. Too good to be true right? Usually RIGHT. I don’t blame people, if you look online sometimes it looks that way and if you watch tv either with the news or advertisements, there are all kinds of myths about buying foreclosure homes with no money or at far below market cost, to make lots of money with no money down, no experience, etc. These are merely myths or half truths and rarely if ever are correct. Here are some realities of buying foreclosure homes or buying distressed properties.

Classified online sites: Unfortunately, there are a lot of classified online sites which advertising buying foreclosure homes have become a hot bed of misinformation, scams, etc. Because there are very few requirements or filters, the scam artists have played on the misinformation about buying foreclosure homes to prey on people. Scammers repeatedly try to sell properties they don’t own by pricing them for far below market in online ads and try to get people to give them earnest money. Particularly buying foreclosure homes are often targeted because they are vacant and they can get pictures and information from legitimate online sources. If people do a little homework, they can figure out the scam or misinformation. Look on other internet sites to see if the home is listed and call the information number to double check the price you have. Look on mls feeds, which many realtors have free use of on their websites. And if all else fails, go by the house and see if there is a sign in the yard or window and call. Also, check out the recorder of deeds, public record or ask the person who you talk to for proof of ownership. If they balk, it is probably a scam.

This company tracks statistics and public records of foreclosure homes put into foreclosure by bank court filings. It lists homes that are in foreclosure or preforeclosure on consumer real estate sites. They also allow subscription on their website to lists of foreclosure homes. These foreclosure homes are usually not on the for sale market at the time listed. Sometimes they will not show the address, just street and city/state and a google earth or similar aerial or other street picture. The price they show is not the market value or list price. It is the price owed on the home from the public record or taxes due. Can you buy these foreclosure homes? Many times no. But most of the time, banks must wait at least 9 months to legally get deed to these homes and then it may be longer for them to put them up for sale. Banks often hold foreclosed properties so the market is not flooded, which reduces prices. But make no mistake, when these homes are put on the market, they will reflect market value or slightly less. They are NOT given away for cents on the dollar.

There are some foreclosure or short sale homes that can be offered for sale on auction sites that are legitimate. BUT you need to know what you are getting. First, on the listing, auction properties have a very low opening bid price, somettimes 0 or $1. Will they sell for this even if you are the high bidder – NO. This is an opening bid price, which is usually 15-20% lower than the bank reserve on the property. These are auctioned by reserve only. Banks are not going to take any risk. If the high bid does not meet their reserve, they can reject it or negotiate with you. One clue what they want is to find out the former mls list price of the home or the market value. That will give you a good idea.

Also, auction properties are not traditional sales and are not often for traditional buyers. They usually do not allow any contingencies. So no inspections. No utilities on – so you do not know what is exactly wrong with the home. Many things you can see on a visit to the home, but busted pipes, non functioning heat or ac, electric? Unknown. And with no utilities – it will eliminate most if not all of the possible loans. FHA and VA are out – they require working heat and hot and cold running water. Some conventional loans with 20% or more down allow no utilities, but most conventional loans under 20% require at least running water. And there is no mortgage contingency, which means if you don’t get the loan, you lose your earnest money, which is usually $2500 (more than most traditional sale properties). Finally, the times to close are typically hard and fast 30 day close, which is possible but not typical for most lenders.

Finally, some auctioned properties are NOT vacant. It does indicate but you need to be careful. Some properties will have the former owners or tenants still living there. If you buy it, it would be up to you to legally remove them. Which means you won’t even be able to get into the home to see it. And it also means that loan possibilities will not likely be available unless you are doing 20-25% down.

Not all auction properties require a total gut though and can be a good deal. However, many auction properties have been on the mls and did not sell. That should be a question – why didn’t it sell?

The biggest benefit of auction properties are transparency of the deal. You know the other bids, there are less manipulation and “monkey business” as there can be with buying foreclosure homes during the offer and negotiation stage. Many foreclosure homes go into blind multiple offers or are awarded to people who were not the highest bidder or even have false multiple offers to try to get you to pay more money without negotiation.

Auctions on foreclosure homes can be online or in person. Online is very easy. If you win the bid, they ask you to put down $2,500 or sometimes 3% of the bid as non refundaable earnest money. You will sign an online contract. You can use an attorney and a Realtor, but their is no attorney review contingency and they will not change their contract or make any modifications. You also will pay a buyer’s premium or fees which can be as much as 5% of the high bid. So, you should consider those when you bid.

You can do a buy it now sometimes for the requested amount to purchase the property prebid. The closing is very similar to a traditonal sale. They will usually give a title (not always so check the fine print), they will transfer deed, etc.

Sheriff’s sales on foreclosure homes are where you can buy foreclosure homes for the taxes do on the property or for the lien owed to the bank. This will be far below market. First, buying these foreclosure homes are cash only. You have to be present at the sale to bid and sometimes there are many properties in the same session, so it can take several auctions. Sheriff’s sales are cut and dry. No title, usually no prior visit of the property. There is a transfer of deed (after redemption periods), but no closing. You pay right there and sign the papers plus any transfer fees. You can get your own title and title insurance from a title company. But if you do not, you will not get a clear title and could adopt any open liens on the property. You would need to resolve those (usually pay them off) before you can sell or loan on the property. If they are sold for taxes due, you do not usually take possession or ownership of the property until after the 2 year right of redemption. Or in the case of a loan, for the statutory redemption period. But you need to pay upfront. And again, you may need to eventually legally evict the occupants.

foreclosure homes
What can you expect from buying a foreclosure home?
First, these are AS IS. You can still do an inspection, AND YOU SHOULD, but the only option you will have is either buy it lumps and all or walk away. Banks and government entities USUALLY will not make repairs to foreclosure homes. SOMETIMES they will, so it is worth an ask, but usually it is rare and only done when it is a matter of loanability. So, you can’t get a loan if this is not done.

Some foreclosure homes will not be loanable by FHA due to condition, some can do conventional and some will not be loanable period. You need to know that before you put an offer it. Consult your loan office and Realtor to see what are the pitfalls.

people with cash – what can you do?
You can buy cash and fix up and do whatever you want with the home, within village code. But be advised that the mass foreclosure and short sale barrage of the last few years has prompted some villages to require point of sale and point of occupancy inspections that require the homes be brought up to code. BUT HERE IS THE KICKER…in these towns you will NOT be able to move into the homes until they are complete, up to code, safe and livable. So you may not be able to live in it and fix up until it is at least in move in ready condition per the village.

resale sites
There are also resale sites that offer foreclosure or other properties. These can be good deals but are never prime properties. Prime properties are always sold traditionally on the open market. First, this scenario is ripe with scams. You need to check out the companies to ensure they are legitimate. You need to wire them money so you need to know it is legitimate by the better business bureau or calling the attorney general. You also can look out on the internet to see if there is anything posted good or bad about the company. There are a couple of legitimate companies. And you need to ensure they have some authority to sell. Again, they should be able to produce Sometimes you can tour them, sometimes you can’t. Sometimes they will have occupants that need to be legally removed by you – the new buyer. Again, everything is done online. Some deals can be financed through them. Sometimes this can be an option for people who do not have the best credit or who want to fix up a home while they live there. Interest rates are usually high. Again, no clear title, so unless you pay for a title, you do not know about liens. AND sometimes, even the legitimate companies do not have clear deed. They will give you back your earnest if they can not get, but that can take several months.

Rehab 203k loans – do they really exist?

Rehab loans exist mostly via the FHA 203k route which allow buyers to loan beyond the amount of the purchase price to either cosmetically rehab homes or do repairs that allow the home to pass FHA guidelines.

Yes, they do exist and recently more lenders are starting to carry streamline FHA 203k Rehabilitation loans to allow borrowers to loan up to $35k beyond the sales price of the home to pay for rehab work.

So, the pink or 70’s shag carpeting can be replaced, the wallpaper or white or bright walls can be repainted, cabinets updated, new tile or hardwood, granite counters installed, stainless appliances purchased, etc. And all can be done at a fraction of the immediate cost through FHA 203k Rehabilitation loans, basically $50 extra per month for every $10k. Yes, it will cost more over 30 years, but less than credit card interest rates and it will happen a lot faster and easier than if you were to save for it and wait and then live in a construction zone. And you will get a deal on a gem of an outdated house.

FHA 203k Rehabilitation loans are a great way to get immediate gratification on that home that ticks all boxes except is not updated and offers buyers a great way to get a good deal on a diamond in the rough.

These FHA 203k Rehabilitation loans; however, are considered high risk by the lenders, and if you think you have to jump through hoops with lenders on a regular deal – double the amount of time, hassle and hoops and that is what to expect.

You have to get a general contractor with experience and who is willing to do a FHA 203k Rehabilitation loans. Although you can get some things done yourself that require no skill and is allowed by the lender and their inspection liasion. Permits need to be filled out and all village codes obeyed and inspected.

You will need to get a contractor right away and they need to be willing to complete forms and comply with all the lender wishes on forms. Usually only 2 draws are allowed – 50% at closing and 50% after completion. Some contractors will not like that. Everyone needs to be licensed for work and everything has to be accounted. You can hire any contractor you want, but they need insurance and licensing, so Uncle George is not likely going to be able to do the job. They can have subcontractors who are licensed.

You usually have 30-60 days to complete the work after closing and then you can move in. You will not be able to live there during the work, that is important to note. Then the lender liaison will approve the work and you move in…. happily ever after.

However, FHA 203k Rehabilitation loans can be tricky for major repairs. Again, high risk becomes higher risk and lenders usually make it very difficult to get this done. Mold or standing water, structural repairs, electrical and sometimes plumbing repairs, or moving or tearing down walls, etc. are very difficult to get approved under this type of loan. Again, lenders try to reduce or eliminate high risks when making loans with the buyer and/or the property. For these kinds of repairs, lenders may require testing or additional inspections and definitely longer review times. This may make foreclosure sellers difficult to get additional time, etc.

FHA 203k Rehabilitation loans ARE possible, but here are a few things you need to know…

Expect at least 60-90 days to close – again, could cause problems with seller, so be prepared and don’t forget the time to close.
You can’t move walls or include pools, furniture, etc. in the streamline loan. There is another type but major reconstruction is really not advisable with a loan.
There are extra fees for the liaison/inspectors the bank will require.
You will start paying the mortgage the month after the closing, so you may start paying even more you move in.
Contractors will delay you. Some contractors don’t like this type of work because of the rules, paperwork and the strict payment and deadline terms. You need to get your contractor bid in before anything can happen, so get everything as fast as possible.
Make sure you get a lender who processed their own loans and can control the process. Lenders who farm this out lose control of the situation and add extra time.
BE patient. The process is very difficult and can be done, but it will be tedious and sometimes not make sense. Remember whoever has the purse pulls the strings and lenders need to ensure the home is worth the extra work.

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.

Veterans Benefits can make Homebuying Easier

Today on Veterans Day, we celebrate and thank men and women vets past and present for their service and sacrifice. But there are more tangible 24/7/365 benefits offered in housing that give an advantage to veterans buying a home.

VA loans are a huge benefit. You can use it any time, one home at a time. VA loans are currently the only NO MONEY DOWN option offered for veterans buying a home. AND for veterans buying a home with low money down usually comes with a PMI private mortgage insurance kicker that can be a couple hundred dollars per month. Veterans buying a home DO NOT HAVE ANY PMI. Huge savings and can help qualify for veterans buying a home in a different price range for the same monthly payment. Veterans buying a home need to have a 640 credit score and qualify for the loan on the debt to income ratio. There is a service fee that is tacked onto the back of the loan, so you don’t ever see it really. Also, there are condition standards that the home must meet. This can make foreclosure homes a little more difficult for veterans buying a home (but no more difficult than FHA financing) BUT not impossible. Veterans buying a home and considering foreclosures need to work with a Realtor and lender who are familiar with the requirements. You also will need a termite inspection (no other loans require) and about 45 days to close.

In Illinois, the Illinois Department of Housing also offers a program for Veterans buying a home to receive $10,000 to pay for closing costs, etc. With no down payment, after closing costs are paid for, the extra money can go to paying down the mortgage loan, which means getting a discount on the home. Great program. Doesn’t have to be done on a VA loan. Can be an FHA or conventional loan. Eligibility does have an income maximum and Veterans can not own another home at the same time to use the program. BUT it CAN be combined with other downpayment grant or assistance monies in certain state areas.
I have sold several homes with the use of these programs, both combined and separately and it enabled my
Veterans buying a home to get a home faster and get more home for the same money.

Not all lenders can do VA loans or participate in the IDHA Heroes program. And not all lenders offer the program, even if they can do it. This was the case with several of my clients. Make sure to ask your lender if they participate in the program. Information about both these programs is available online at idha.gov, hud.gov and benefits.va/gov/homeloans.

Another feature for veterans buying a home or just living in a home is the various tax exemptions offered by various counties. An exemption on your taxes is like a discount offered to certain people like homeowners, seniors, disabled people and veterans. This tax exemption or discount deducts a portion of your assessed value, which you are taxed on. Anything helps when it comes to taxes. You need to apply for the exemption with the county you are in and some you need to renew each year. Cook County, for example, offers tax exemption discounts to Returning Veterans and Disabled Veterans. More information and forms at http://www.cookcountyassessor.com/exemptions.aspx. Will County offers many Veteran exemptions including Returning Veterans, Disabled Veterans, special homeowner exemption for Disabled Veterans and tax exemption for Veteran Organizations (like VFW, American Legion, etc.). More information at http://www.willcountysoa.com/exemptions.aspx.

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.

Echo Boomers Mark the Future for the Home Market

The big question many people are asking is about the future of the home market.  After the “bad years” or the bottom of the market experienced in 2008-2012, 2013 marked the up swing in pricing.  Many areas not riddled with distressed properties experienced an average of 10% price increases from 2012.  Low interest rates and increasing consumer economic confidence brought buyers into the market in 2013.  Inventory shortages drove prices up slightly and created some buyer challenges,but buyers bought homes in 2013.

2014 seems to be more of the same – so far.  Interest rates are still low and buyers are still in the market.  So, what does the future hold for the home market?  Sheer demographics can provide some of the answers.

80 million people were born in the US between 1982 and 1995.  They are called Echo Boomers or Millennials.  This is slightly larger in 4 fewer years than the 77 Billion born from 1946 to 1964 – otherwise known as the Baby Boomers.

Just as the baby boomers changed nearly every aspect of society with their large numbers at every stage in their lives, the larger masses of the echo boomers promise to make an equally big impact, including starting up the housing ladder, which has been in a stall for the past few years.

The oldest echo boomers are are 32 years old with the youngest at 19.  With many in this generation waiting until late 20’s to marry and have a family, these people are just starting to be secure in their careers and finances to buy homes.  By saving (living with parents), dual incomes and better salaries from mostly college and some graduate-level degrees, this generation has more money to spend right out of the gate.

They will buy first-time buyer and first- move up homes or larger, which allows the people with those homes to move up the home ladder to a larger home and/or in the case of the empty nesters and seniors, maybe move down to a maintenance-free home. This allows the housing market to progress.  When these buyers start their journey up the ladder, it allows everyone to continue up or down the ladder.

The next five years will bring the bulk of these buyers into the marketplace and will help prices increase and stablize.  So, the future of real estate is good, relying on the Millennials.

10 Fastest Ways to Kill Your Chances to Get a New Home

You are prequalified, you find a home and go through the whole process only to be derailed at the last minute.  No closing, no new home.  You spent money on inspections and appraisals and maybe even now have no place to live.  WHY?  A mistake you made in your finances changed the status quo and made you unloanable.  YOU can avoid these situations and ensure you get to the closing and get the keys.  I have had people in these situations and yes – it killed their deals.

When you are looking for a new home, you need to be an angel.  You need to keep an open book of finances and ensure that you keep the lines of communication open with your lender.  Here are the biggest things to avoid – EVEN A YEAR from buying a home.

1.  KEEP YOUR FINANCES SIMPLE.  Keep your money in the bank.  Any major deposits or withdrawls of money in your bank account can affect your closing costs and will cost you a lot of time and paperwork in letters of explanation.  If your spouse is not on the loan, don’t move money back and forth between accounts – keep it simple.

2.  PAY ALL YOUR BILLS ON TIME.  A no brainer, but you would be surprised.  Even if it is the wrong amount, even if they are wrong and you are right, PAY THEM.  You can always get credits, etc. but don’t let them report you to the credit bureaus.  No late payments, no problems.  One old collection or new debt can change your debt-to-income ratio.  Late payments are often not excused, even if you have a good reason.  And post BK late payments are a strict no no.  Another idea is to subscribe to a credit monitoring agency for this period of time so you know if anything is reported to effect your credit so you can head it off before any damage is created.  Old debts can pop up at any time as creditors go to new collection agencies or redo their books.

3.  DO NOT COSIGN FOR ANYONE – for anything.  Neither a borrower or lender be.  This is new debt and can change your ratios or if they default cause you not to be eligible for years.

4.  DON’T CHANGE YOUR JOB.  Job stablility is one of the criterias that are used by lenders. If you are in the same industry and get promoted or make more money or at least the same money, you should be fine, but a new job in a new industry can be a wait of 6-24 months. And income can affect your qualifying ratios. Obviously a non-voluntary change is unavoidable, but sometimes a volutary change can be scheduled.

5.  NO NEW CREDIT CARDS.  No matter how much they offer you to save that day – do not apply for any new loans or credit cards. Credit is a delicate thing and it can be affected by how much credit you can get and balance, credit limit ratios.

6.  KEEP YOUR CREDIT CARD BALANCES LOW AND PAYMENTS HIGH. Credit cards can be your best friend or worst enemy. Balance and credit limit ratios can severely and quickly plummet your credit score.   Continue to use the credit cards – stopping can hurt too. Just use them sparingly for minor purchases and pay off all or most when the bill comes.

7.  STUDENT LOANS – DON’T CHANGE THEM – PAY ON TIME OR KEEP THE WAY THEY WERE. Student loans are complicated.  But they are one thing that can quickly ruin your loan and affect you for a long time.  Pay them and don’t change them during this process.   They are a major loan and not only affect your credit, but if you are doing an FHA, VA loan, getting any type of downpayment assistance or even a non government loan, any issues with default, slow payment or non payment of student loans can kill your deal.

8.  DON’T GET ANY TICKETS. Parking tickets, speeding tickets, toll tickets, no village sticker tickets.  Municipalities tend to send their collections out swiftly and frequently so you can get the same ticket on your credit multiple times – causing multiple reductions.   Also, you need a photo id in order to close – driver’s license, state id or passport.

9.  FILE YOUR TAXES AND DON’T FILE AMENDENTS. Taxes are lenders favorite issue these days.  File on time – April 15. Don’t file extensions, don’t file amendments to past years – no “second look” until after closing.  Even W2 employees who do not file a lot of deductions are suspect.  They want to see the income you report to the government for verification.

10.  DON’T BUY ANYTHING MAJOR – DON’T EVEN APPLY FOR A LOAN ON ANYTHING.  WAIT until after closing day to buy new furniture or things for the house, new car, change your car loan, etc.  New loans can change your debt ratios and hurt your credit score for additional credit and inquiries.  Even paying cash can be those big deposits and withdrawls discussed earlier or could take more money out of your account for closing.  Lenders like to see sometimes more than your closing costs in your bank account.

I know it seems strict, but getting the keys to your home is your main goal, everything else must be second until you close.  If you are not sure if something will affect you – by all means, contact your lender and discuss it.  They should be happy to help.