Caution Chicago First Time Home Buyers!!

One of the first things I tell all of my clients whether they are a first time home buyer or looking to refinance is, “Do not buy anything on credit or use your credit cards until your loan has closed and funded.” The reason for this stems from a past client who decided to buy a new car during the finance process. Now mind you this was not a new car that was bought out of necessity but a nice new Lexus that was bought because they liked it. Lo and behold we got to a couple days prior to closing and the lender re-pulled the borrower’s credit. The new car payment wound up putting the borrower’s debt ratio too high which in turn caused the borrower not to qualify for the loan.

Enter the Fannie Mae Loan Quality Initiative for applications starting June 1st. The new Fannie Mae guideline will require a  new credit report to be pulled prior to closing/funding. The lender is required to check to see if any debt or obligations have been added. If new obligations show up on the new credit report or the current obligations have increased some lenders may require the file to go back to underwriting for review. What this means is to you the borrower is potential delays. If the home you are buying is a short sale then you could lose out on your earnest money. Just the fact that your file could go back to underwriting will cause delays and possibly cause your file to be declined. So Chicago first time home buyers should think twice before buying new furniture for their new home prior to closing.

If you have any questions about financing the purchase of a new home or the refinance of your current home please fill out the form below and you will be contacted within 24 hours.

So all of the experts had predicted rates would head higher once the Fed withdrew from buying mortgage backed securities. The prediction of higher rates along with the end of the home buyer tax credit was supposed to be a double whammy for Chicago first time home buyers. Along came Greece and the financial troubles across Europe. The financial troubles in Europe triggered a sell off in the stock market and a flight to safety for investors. This meant that investors began moving the money out of the stock market which in turn triggered lower rates.

So what does this all mean for the first time home buyer? Lower rates!! The first time home buyer credit may be gone but interest rates have moved under 5% and are the lowest they have been in a long time. The cool weather has moved away and it appear Summer is beginning to take hold. If you are in the market to buy a home now is a great time. With interest rates under 5% this may be the best time to buy that dream home. As I tell all of my clients do not procrastinate and think that rates will stay low. All it takes is a couple bad day for interest rates to jump and possibly price first time home buyers out of that dream home.

So the first time home buyer tax credit is done so now what?

While it would have been nice to take advantage of the $8,000 the government was giving away all is not lost. Great deals are still available on homes in the Chicagoland area. Interest rates which appeared to be headed north have continued to tread water. Sellers are still contributing towards closing costs. So while the $8,000 first time home buyer credit may be gone this is still a great time to buy a home. If you are in the market for a home right now do not put things off because the first time home buyers credit is gone. If you wait too long you may just miss out on great interest rate and even greater home prices.