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.

Well time is definitely running out on the tax credit for Chicago first time home buyers. In order to take advantage of the first time home buyer tax credit you must have a signed contract to purchase a home by April 30th and close by June 30th. Now I know it may seem like April 30th is a long way off but trust now is not the time to procrastinate. We have already started to see an increase in Chicago first time home buyers who are ready to write an offer on a home. Underwriting times at lenders are still reasonable, typically 48-72 hours. As we get further in to April I can definitely see those times doubling or tripling.

If you are in the market to buy a home and have not gotten prequalified yet do not wait too much longer. Pick up the phone and give me a call or send me an email to get started on your prequalification. We can typically have you prequalified within a couple hours of receiving the necessary documentation. Chicago first time home buyer should not hold out hope that the tax credit will be extended. When was the last time Uncle Sam was giving away $8000 to regular people like you and me?

Naperville Real Estate: Astor Place Townhomes

Here is another Naperville community for Chicago first time home buyers to consider. This Naperville real estate community comes to you courtesy of Ken Tracy. Ken is a Realtor who specializes in the Naperville real estate.

Ken Tracy

Mobile:
630-697-0536

Fax:
630-778-9640

Astor Place Townhomes Market Report:  Naperville Real Estate

An end unit townhome in Astor Place on a snowy day..

Astor Place, a townhome complex built in 2004, is located at the corner of Route 59 and Diehl Road.  With great access to the highways and a maintenance free lifestyle, Astor Place is perfect for those on the go…

The homes at Astor Place come in several models.  Two and three bedroom homes come with finished basements and high end upgrades.  Prices range from the low $300’s to the low $500’s…

Astor Place is located in Naperville 204 school district.

Homes Sold in 2009:  0

Average Sales Price in 2009:  NA

Homes Currently for sale:  6

Average Asking Price:  $402,717

Are you interested in buying or selling a home in Naperville?  Call me anytime at 630-697-0536, or go to my website at www.KensFeaturedHomes.com.

Chicago First Time Home Buyer: The Seller Accepted My Offer, Now What?

Okay so the seller has accepted your offer after some great negotiation on your Realtors part. You have finally crossed one hurdle only to wonder what’s next? As a Chicago first time home buyer you have never been through this before so it is natural to wonder, what is next? I will outline the typical steps that my borrowers will go through once the purchase contract has been signed and accepted by the seller. Now I say typical because each first time home buyers experience can vary depending on their situation. Now this list of items will assume that I have already received your mortgage application along any other documents that I have requested.

Once i receive the purchase contract I will contact the attorneys as well as the Realtors in make an initial introduction. This is an important step since all of the professionals involved in the the Chicago first time home buyers new home purchase must work together. If your loan is an FHA loan then an FHA case number is ordered. At this time the appraisal is also ordered so that once the attorney reviews the purchase contract the appraisal can be completed. If the first time home buyer is having a home inspection performed then the appraisal is delayed until the home inspection is completed.

Once the appraisal is received your complete application along with the appraisal is emailed to the lender for an underwriter to review. Now the time for the underwriter to review your file can vary by lender, by the time of the year and by the time of the month. For example right now many of our lenders are 48-72 hours to review a loan. Once the underwriter reviews a loan they then issue an approval along with conditions. The conditions are additional items that the underwriter wants to review prior to issuing a clear to close. Some of the items that the underwriter may request prior to issuing a clear to close are:

1.  Title commitment from the seller.

2. Verbal verification of employment for all borrowers.

3. Proof of home owners insurance.

4. A copy of the cleared earnest money check.

5. Additional income verification

6. Additional comparable sales form the appraiser.

The list really can go on and on. Usually when we submit a file for a lender to review the only items that are needed are the title insurance, homeowners insurance and the verifications of employment prior to closing. Once I receive the approval back from the underwriter I will contact my borrower to go over the items that are needed in order to receive a clear to close. When the underwriter has reviewed the additional items that were requested and is satisfied with them the underwriter will issue a clear to close. A clear to close means that the underwriter is happy with the the first time home buyer’s application and we are ready to schedule the closing.

Now things will move pretty fast. At this point I will contact all of the parties involved to let them know we are ready to schedule the closing. Typically the attorneys will contact the buyer and seller to setup a closing date that is convenient for everyone. A couple of days prior to closing I will contact the borrowers with an estimate of the amount of money they will need to bring to the closing. Next up is the actual closing where the Chicago first time home buyer’s attorney will go over the loan documentation as well as some additional documentation. The actual closing usually does not take more than an hour or two at most. The primary delay on closings is waiting for the wire (funds) from the lender which can take longer depending on what time of the month the closing is taking place.

This pretty much wraps things up. If you have any questions regarding the information covered or are in need of a loan to purchase a new please complete the contact form below.

Chicago First Time Home Buyer: FHA Changes Are Here Sort Of

Well HUD officially announced changes to FHA loans which will start taking effect in April. HUD announced the following changes will effect both purchase money transactions as well as refinance transactions. Chicago first time home buyers will definitely be affected by these changes. If you are currently in the market for a new home or looking to refinance your current home you should definitely pay close attention to these changes. The changes that are being imposed on FHA loans are the following:

1. Upfront Premiums increase

The current upfront mortgage insurance premium charge is 1.75%. On a $200,000 mortgage this is currently a charge of $3500 which is added to the loan amount on an FHA loan. The change which will be in effect for FHA case numbers that are assigned on or after April 5, 2010 will increase the upfront premium to 2.25%. On a $200,000 this will mean an additional $1000 cost to the Chicago first time home buyer.

2. Updated credit score and down payment requirements

New borrowers will have to have a minimum of a 580 credit score to qualify for the FHA minimum 3.5% down payment. Borrower with less than a 580 credit score will be required to put down at least 10%. This really will not affect Chicago first time home buyers because almost every lender has raised their credit score requirements to a minimum 620 credit score. This requirement will go into effect early in the summer.

3. Reduced allowable seller concessions from 6% to 3%

Currently sellers are allowed to give the borrower a credit of up to 6% towards closing costs. With the new change the maximum seller contribution towards closing costs would be 3%. This means if a Chicago first time home buyer were to purchase a $200,000 home the maximum seller credit would go from $12,000 to $6000. This change will also go in to effect early in the summer.

4. Increase enforcement on FHA lenders

This change will not affect Chicago first time home buyers directly. HUD will be monitoring FHA lenders more closely and is looking at increasing the enforcement on FHA lenders.

There is also talk that HUD may look to increase the monthly mortgage insurance premium down the road which in turn would increase the monthly mortgage payment. While some of these changes do not take affect until the early summer Chicago first time home buyers will definitely not want to wait until April to find their new home.  With the changes that take affect in April and early in the Summer Chicago first time home buyers could potentially lose $7000 on the purchase of a $200,000 home. That sure is a whole lot of money to throw out the window.

Chicago First Time Home Buyer: First Time Home Buyer Tax Credit Update

Well it appears that the first time home buyer tax credit has run into some delays. If a Chicago first time home buyer purchased a home after November 6th then you should not expect your tax credit for a while.

Prior to November 6th if you bought a home after closing you could file amended taxes and expect to receive your refund. Everything changed after November 6th.  November 6th was when the first time home buyer credit was extended and expanded. As of November 6th the IRA has not allowed anyone to file. For those Chicago first time home buyers who had closed on the purchase of a home prior to November 6th they could file a form 5405 to claim the credit right away with no additional documentation. For those first time home buyers closing after November 6th unfortunately there was no form until today.

With the previous first time home buyer tax credit program other than filing the 5405 form there was no other documentation required. Now move up buyers will have to prove that they have lived in their current home five of the prior eight years. First time home buyers will have to provide a signed copy of the settlement statement (HUD-1) attached to their tax return. Since there is no way of sending along the settlement statement with an E-File first time home buyers will have to file a paper return. Yes your heard that right you will now have to file a paper return rather than electronically filing. What does this mean for Chicago first time home buyers? Having to file a paper return means that first time home buyers and move up buyers may be looking at another three months before they get their returns.

Unfortunately, honest first time home buyers and move up buyers will suffer due to people claiming the credit who had not purchased a home. One tax preparer was convicted of falsely claiming the tax credit for 15 of his clients.

Here is a link to the actual tax updated tax form and the instructions:

First time home buyer tax credit form

Instructions for completing the form

For questions regarding the tax credit or new home financing feel free to complete the form below

Chicago First Time Home Buyer: Tax Credit Time Running Out

A Chicago first time home buyer client of mine called today to let me know they were going to take a break from looking at homes. In their own words they had plenty of time to find a home and just did not think that there were enough good deals out there. Besides they said, “I am sure the government will extend the first time home buyer tax credit anyways.” After picking myself up off the floor I advised my client that they should not rely on the government extending the first time home buyer tax credit.

After asking some additional questions it appears my client has been looking at homes in the $300,000 range  and offering $250,000 or less. They were just amazed that no one was accepting their offers. I gave their Realtor a call and he said he had advised them that their offers were too low but the buyers insisted on the realtor submitting their offers.

Lets face it right now is a great time to buy as i have said before. There are some great deals to be found on homes which combined with low rates and the first time home buyers tax credit make this a great opportunity for the Chicago first time home buyer. While there are good deals people are not going to give their homes away. If you find a home that you like and can afford then consult with your Realtor about making a realistic offer. Time is running out on the first time home buyer tax credit, Chicago first time home buyers should not let this opportunity pass them by.

For information regarding new home financing or refinancing please complete the contact form below.

Naperville Real Estate: Riverbrook West Townhomes

Ken Tracy is a Realtor that I work with who specializes in Naperville real estate. One of Ken’s New Years resolutions was to make 31 posts about the Naperville real estate market  as well as the surrounding areas by January 31st. In and of itself this goal of 31 communities in 31 days is pretty aggressive for anyone especially for a Realtor that is as busy as Ken is. As many of you know a large percentage of my business involves working with Chicago first time home buyers. The more I thought about it the more I figured that my first time home buyers could definitely benefit from these community reports that Ken would be doing. So over the next few weeks I will include some of the Naperville real estate reports that Ken does. I will try to keep the communities to ones that would be of interest to Chicago first time home buyers. If you see a community that interests you be sure to follow up with Ken at his site www.kensfeaturedhomes.com .Please let Ken know Roy sent you.

Ken Tracy

Mobile:
630-697-0536

Fax:
630-778-9640

The first community we will look is the Riverbrook West Townhomes.

Naperville Real Estate: Riverbrook West Townhomes Market Report

The Riverbrook West townhomes in Naperville, located just off of North Aurora Road east of Route 59, is a model of effieciency…

The homes in Riverbrook West come in two and three bedroom models with basements.  The rooms are nicely sized.  This quiet neighborhood is in Naperville’s 204 School District…

The sun peeks through the clouds over Riverbrook West townhomes in Naperville..

This nice sized townhome features a two car garage in North Naperville..

Homes Sold in 2009:  4

Average Sales Price in 2009:  $218,000

Homes Currently for sale:  4

Average Asking Price:  $235,225

Are you interested in buying or selling a home in Naperville?  Call me anytime at 630-697-0536, or go to my website at www.KensFeaturedHomes.com. Remember to call Ken who is an expert with Naperville real estate.