1st-Time Home Buyer in Chicagoland?
Consider Seller-Paid Closing Costs
Looking out my office window right now, you'd never know that Spring ... and Spring's busier Chicagoland housing market isn't that far off. Yet, the Spring time change is here ... and warmer temperatures are predicted soon ...
Chicagoland First-time Home Buyers (those that oftentimes are purchasing homes from the low $100K's to the low-$200K's) and anyone else hoping to buy during this upcoming Spring and Summer markets, should be making plans and taking action NOW. Not waiting until winter snow disappears from the ground and temperatures are rising.
So, if you're a hopeful Chicagoland First-Time Home Buyer (or someone seeking Mortgage financing for a step-up purchase) what should you be considering and educating yourself about right now? What should be the beginning point in your home buying and financing process?
First of all: Find yourself a knowledgeable, experienced Mortgage Lender to work with.
Not sure how? Here's a few suggestions:
Inquire with Real Estate Agents that transact in Chicago - Chicagoland area in which you hope to live. Check with Real Estate Attorneys, your friends or family members that have Closed on a Mortgage loan recently.
Talk to Insurance Agents and others that work in the local real estate industry. Gather names. Note those that are mentioned multiple times. Don't skimp on the attention you give this matter. Do your homework.
Then have a long talk with me (your Lender) about your finances and your Credit. Get Pre-Approved to discover:
- What Home Buying options exist for you
- Your Credit Scores
- Your Credit capabilities
- If elements of your Credit need polishing
- The Price Range of home you can buy
- Establish a time frame for your upcoming purchase
One of the most important topics you'll talk about will be regarding a Down Payment on your home purchase. At this time in the year, I often hear from Borrowers that Income Tax Refunds will be a contributing source to their Down Payment funds.
For Buyers hoping to utilize Income Tax Refunds during their home purchase (or Agents working with those Buyers), the following actions are critical:
- Make sure that Income Tax Returns are filed as early as all supporting documentation (W-2's, etc.) is received
- Tax Returns should be filed electronically. This expedites the depositing of Tax Refunds into Checking or Savings Accounts
- Allow time for me (your Lender) to confirm your 2014 Filing with the IRS
It's important to know: Income Tax Refunds ARE acceptable to Lending Underwriters when saving and/or accumulating assets to buy a home.
Since most loan programs require Down Payment funds to come from the Buyer, it's important to demonstrate Down Payment funds as verifiable money in accounts. (Accounts can be Savings, Checking, Money Market, Mutual Funds, Bonds, Stocks, and Retirement.)
- Minimum Down Payment on FHA Loans is 3.5%
- FHA requires a 3.5% Down Payment, but ALL or PART of that Down Payment can be a Gift
- Minimum Down Payment on most Conventional Loans is 5%
- At this time, it remains totally acceptable for Sellers to pay Closing Costs.
In the case of Sales Prices under $100,000: It's almost necessary to get Seller-paid Closing Costs due to new regulations in place as of January 10, 2014, per the Consumer Financial Protection Bureau (CFPB). Certain Closing Costs ARE allowable when Seller-paid. That simply allows me (your Lender), to cover the cost of traditional fees incurred in a Real Estate purchase at Closing time.
I've included a breakdown of the guidelines (as of this writing) on the maximum allowable Closing Costs that a Seller can pay. These Costs are expressed as a percentage (%) of the Sales Price ...
For Conventional Loans:
- Fannie Mae - 3% if Owner-Occupied *
- Freddie Mac - 3% (2.5%in some cases) if Owner-Occupied
- Investment Property - 2%
* Can be greater, if Loan-To-Value is less than 90%
For FHA:
- Up to 6%
For VA:
- Up to 4%
As you can see, there's quite a list of things to talk over with me when your hoping to buy a Chicago - Chicagoland home. It's normal to have lots of questions.
Let's get started and get all your questions answered. Contact me now so we can best prepare you to successfully buy a home ...
* Hoping to Buy, Refinance, or Build a Home in Chicago or the greater Chicagoland area? Contact me! I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
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