Tips For Finding the Perfect Neighborhood

Posted at 4:29 AM, Mar. 2, 2007

1. Make a list of the activities—movies, health club, church—you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you’re considering to engaging in your most common activities.

2. Check out the school district. The Department of Education in your chosen community can probably provide information on test scores, class size, percentage of students who attend college, and special enrichment programs. Even if you don’t have children, a house in a good school district will be easier to sell in the future.

3. Find out if the neighborhood is safe. Visit http://12.17.79.6/ctznicam/ctznicam.asp for the City of Chicago’s Police Department Citizen ICAM Crime Stats. You can target an address (for example) and backdate in 14-day increments all the reported crimes within that radius. Consider not only the number of crimes but also the type—burglaries, armed robberies—and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area? You can also check an alternate site called http://chicagocrime.org/ Don’t forget to check the annual report for the police department. This breaks down types of crimes per community area as well as other demographics.

4. Determine if the neighborhood is economically stable. Check with the local community Chamber of Commerce or the City of Chicago’s Department of Housing to see if income and property values in the neighborhood are stable or rising. What is the percentage of homes to apartments? Apartments don’t necessarily diminish value, but they do mean a more transient population. Do you see vacant businesses or homes that have been for sale for months? You can find out other demographics and information about a specific neighborhood by visiting http://www.chicagotribune.com/classified/realestate/communites.

5. See if you’ll make money. As your agent, I can provide information about price appreciation trends in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good an investment your home will be. Agents or the city also may be able to tell you about planned developments or other changes in the neighborhood—like a new school or highway—that might affect value.

6. See for yourself. Once you’ve narrowed your focus to two or three neighborhoods, go there, and walk around. Choose a couple of different times to get an accurate appreciation of the community. Are homes tidy and well maintained? Are streets quiet? Is there a lot of traffic up and down the street? Check the alleys for debris or graffiti.   Pick a warm day if you can and chat with people working or playing outside. Are they friendly? If you have kids, are their other children around to play with yours?

Foiled Again!

Posted at 6:31 AM, May. 21, 2009

Of course it was too good to be true.  Apparently, despite the announcement issued from HUD on May 12, 2009. the incentive that would allow first-time home buyers to monetize the tax credit of $8,000 towards a down payment has been retracted. 

According to officials, the incentive resembles the now illegal seller assistance with down payments on FHA loans.  The IRS also has stated it's concerns on the implications to future tax returns.

We've been told there is efforts being put forth to come up with a solution that will shorten the gap in the bridge between buyers and loans.  Let's hope so.

You Can Now Get A Down Payment Via Tax Credit!!!!!

Posted at 7:47 AM, May. 15, 2009

This is HOT off the press, HUD just released a statement that reports that FHA is NOW going to allow the 2009 Tax Credit of $8,000 to be "monterized" at the closing table so that first time homebuyers can use it as part of their down payment!!!!!  This has been a continuous effort on the part of National Association of Realtors who have been pleading with goverment to make this a possibility and help get buyers into homes.  Read the story from the Association here.

The money is being borrowed (just like an advance on your paycheck) but it is still $8K you didn't have in the first place.  If buyers fail to pay it back from refunds at tax time (without interest) it will have be added to the current mortgage with interest. 

How buyers are going to go about this is, once they identify their property of purchase with contract, they need to contact their CPA to file a ammended tax return with a 5405 form who will then send it off to the IRS.  Once received, the money will be wired into a designated bank account within 7-12 business days and will be considered verifiable funds that all lenders will accept. 

So if you have been hesitating about buying, STOP!  It does NOT get any better than this.  Call your lender or your trusted Realtor today.

Multi Unit Maneuvers

Posted at 12:46 PM, May. 10, 2009

I recently started working with a buyer who is in the market for a multi-unit building in the West Ridge (aka West Rogers Park) area.  This particular sector has proven to be quite the challenge. 

I have already been shopping for a large entity since January and have seen over 100 multi-family buildings on the Northwest side of Chicago including Albany Park, Irving Park, Dunning, Hermosa, Logan Square, Humboldt Park, Avondale and Mayfair so I have seen my fair share.  What has made this particular market so difficult is the amount of the buildings that are either in foreclosure or in a short sale situation.  Now, couple that with tenants (aggitated and uncooperative none-the-less) and you have a day of frustration on your hands.  I can't tell you how many times I had appointments that I could not get into the building because of the tenant problem. 

The good news (from a buyer's perspective), is that this market was the hardest hit.  There is a considerably smaller demand for multi-unit buildings so values have dropped dramatically.  However, even with the great price reductions, most that I have seen are in need of repair.  There is a lot more "house" to fix.  Lastly, when the majority of the buyers out there are using FHA loans, well, you have a formula that can pretty much spell disaster.  FHA back loans require properties to have only minimal work needed and can take longer to close making foreclosures and short sales a higher risk for buyers.   So in essence, when shopping with new buyers using FHA loans and looking at multi-family buildings, you are literally looking for that needle in a haystack.

Boy I love a good treasure hunt!

The Revised Tax Credit

Posted at 9:56 AM, Feb. 25, 2009

Unsure of the difference between the previous new homebuyer's tax credit and the new one?  Learn the difference here.

Predatory Lending Database Program Fact Sheet

Posted at 3:05 AM, Sep. 29, 2008

Illinois has enacted a comprehensive predatory lending measure, Public Act 95-691 (SB 1167) that is now in effect as of July 1, 2008.  This law revises the predatory lending pilot program that was originally in the HB 4050. 

The purpose of this program is to reduce predatory lending practices by assiting certain borrowers in understanding the terms and conditions of the loan that is being applied for.

Borrowers will be required to undergo counseling if the borrower and the mortgage they are applying for meet certain criteria.    This information will be placed into a database accessible only by housing counselors, closing agents and licensed mortgage brokers and loan originators. 

Requirements are:

A.  The broker or loan originator is not exempt from the Residential Mortgage License Act

       AND

B.  The borrowers (all of them if more than one) are first-time homebuyers seeking a mortgage on a 1 to 4 unit dwelling that will be owner-occupied in Cook County or the borrowers are refinancing a primary residence.

       AND

C.  The loan includes one or more of the following characteristics:

* The loan permits interest only payments;

* The loan may result in negative amortization;

* The total points and fees payable by the borrower at or before closing will exceed 5%;

* The loan includes a pre-payment penalty; or

* The loan is an Adjustable Rate Mortgage (ARM) which allows adjustments of the interest rate in the first three years.

The program will be administered such that ALL mortgages recorded in Cook County will need to have a Certificate of Compliance or Certificate of Exemption attached to the mortgage.  Counseling must be done by a HUD-certified agency. 

If the borrower qualifies, prior to closing they will be notified and given a list of participating counseling agencies.  Only after this review will the loan be given a "clear to close" status.  Should the closing agent upon review notice any changes to the originial loan terms, the buyer would be required to re-counsel and the loan would be suspended until further notice. 

Get While the Gettin's Good

Posted at 5:05 AM, Sep. 15, 2008

Just as any good thing comes to an end, so will the buyer's market.  There is still a surplus of properties waiting to be had.  Yet still, too many buyers are riding the fence; debating with themselves whether or not is this the right time.  There is no right time.  Ever.  Not to have kids, change jobs, move, get married, buy or sell anything.  This is what I know to be true.  There is only right now.  Anything that requires major change will require faith.  Faith that for YOU, this is your moment. 

So, if you are going to take advantage of this market trend, do so with a few pointers in mind. 

Start with what you want.  Forget the numbers and look at where you are in your life and where you would like to be in the next 10 years.  It doesn't have to be a near reality, just a desire.  Seperate those wants with what is necessary and what is a desire.  Do you need to be close to the train, or do you want to be close to the train.  How would you decifer that?  Ask yourself, would you pay $20K more for a home for that privledge?  If not, that it isn't a need.  Apply that to your entire list.  If you get these things on your list without paying extra, well, that's just gravy!

After you have established that, look at your numbers.  Pick a reasonable range that reflects your need list and broaches perhaps your wants.  From this, you can realistically see a good deal when it presents itself.  Then ask yourself, do you expect to move, or are you just entertaining it because of the times?  No one likes a luke warm buyer anymore than a self-decieved seller.  If your not in it for keeps, get out.  Rules to live by.

Why Real Estate Is Still A Good Investment

Posted at 12:59 PM, Sep. 3, 2008

Why Real Estate Is Still A Great Investment

Source:  HousingMarketFacts.com

Get Your Finances in Order: To-Do List

Posted at 6:31 AM, Aug. 25, 2008

6. Keep your job. While you don't need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.

7. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.

Does Moving Up Make Sense?

Posted at 6:22 AM, Aug. 4, 2008

6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Take the Stress Out of Homebuying

Posted at 6:16 AM, Jul. 28, 2008

1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.

2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price, and a good home won’t stay on the market long.

3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.

4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.

5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.

6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.

7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.

8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.

9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.

10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live.

Tax Benefits of Home Ownership

Posted at 6:13 AM, Jul. 21, 2008

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.

7 Reasons to Own Your Home

Posted at 6:11 AM, Jul. 14, 2008

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Online resources: To calculate whether buying is the best financial option for you, use the “Buy vs. Rent” calculator at www.GinnieMae.gov.

Bank Of America To Eliminate 7,500 Jobs

Posted at 7:18 AM, Jul. 9, 2008

In case you haven't been following the news, Bank of America is buying out Countrywide as of Tuesday.  With this acquistion, a total of 7,500 jobs will be eliminated. 

How does this benefit anyone?  Well, becuase of this buyout, Countrywide is offering a non-repayable gift of $1,500 in Cook County for low to moderate income buyers.  Look for the Countrywide Bank Express Grant.

10 Ways To Prepare For Homeownership

Posted at 6:03 AM, Jun. 30, 2008

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you'd like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. That doesn't mean you should put off homeownership if you have less. Also, don't forget to factor in closing costs. Closing costs - including taxes, attorney's fee, and transfer fees - average between 2 and 7 percent of the home price. Talk to a Real Estate Expert of what best suites your situation.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options - such as 30-year or 15-year fixed mortgages or ARMs - and decide what's best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.

Helping Junior Buy

Posted at 3:25 AM, Mar. 28, 2008

Parents, if you really want to give your kid a head start, help them buy a home. 

It's funny, so often this is considering a rite of passage with marriage, or a sign of growing up, but some markets are making it more difficult to buy a first home especially if you are newly graduated from college and carrying debt. 

A recent real estate article offers many tips on how parents can assist their children with jumping over that first-time-buying hurdle.

RATES TO SCREAM OH YEAH!

Posted at 7:23 AM, Dec. 5, 2007

If you haven't heard the latest and greatest, 30 year fixed rate loans are at 5.75% This is a fantastic rate that is sure not to last into the New Year. If you currently have an ARM nearing adjustment, want to get out of a Interest Only, or have a higher fixed rate-NOW IS THE TIME TO REFIANCE!!!!

To all of you on the fence would-be buyers, BUY NOW! Prices on homes are record-breaking and the interest rates are going to be short-lived. Take advantage of this now before you miss the boat.

Call your preferred lender or mortgage broker today or email me for a referral. Don't hestitate. I didn't and I am saving about $300 off my new mortgage.

Why Buyers Should Take The Bait

Posted at 5:01 AM, Nov. 30, 2007

One That Would Have The Fruit, Must First Climb The Tree...Thomas Fuller

Here are a few compelling reasons why buyers should, excuse the phrase, get off the pot.

1) Interest Rates are below 6%. Wow. Waiting for that additional $10-15,000 drop in price will mean squat if interest rates go back up. Judging from the concerns on Capital Hill with Fannie Mae and Freddie Mac, which by the way are the primary reason there is money out there to loan to consumers, interest rates could very likely go back up to keep investors happy and the government can avoid using a safety net.

2) If housing costs are going up, guess what, so is rent. Opting to rent does not save consumers from the burden of expenses. Landlords just pass it on down. In the end, renters pay more with nothing to show for it except receipts.

3) The Evils of Subprime Markets. The reality check here is that the first and foremost reason there is so much trouble in the mortgage industry is that consumers were taking on more than they could handle. Speciality products are not bad. It is very reasonable to use an Interest Only option or ARM to get in the door as long as you look at the worst case scenario and here is the key, apply discipline.

Most stories that I have read concerning those facing the perils of readjustments usually have several factors involved. A) Low income or No income at all B) Never took proactive measures to clean up their credit and refinance at a better rate C) Used their homes like a piggy back to purchase expensive cars and fund vacations or D)Barely could afford the home even at the lowest rate. Just because you can qualify for a $450K mortgage does mean you should. Sit down and examine your cash flow and see what is reasonable. Champagne taste on a beer budget always spells disaster. Be mindful of housing prices in your area and buy what is in alignment with your budget, not your fantasies.

4) Foreclosure is a small segment of our market. Places that have been devasted will include massive job loss such as Michigan for example. Cases of too many eggs in one basket. Other places hit hard involved people leveraging themselves to get rich quick in real estate. That doesn't even belong in the same sentence! The remainder mostly applies to those casualities of the sub-prime market meltdown. I won't even call them victims for many had opportunities to strengthen their position in their home once in the door and they failed to take it, or abused the privledge of home ownership to begin with. I am not trying to be harsh, but the media has played way too long and too hard on stories that quite frankly, were examples of what I just mentioned.

Now is such the ideal time to be taking advantage of rates and low price tags. Buyers markets are short lived in theory. I know several whom have turned away from opportunity because of the fear of commitment. One saying that always sticks with me is this, Tough times can come against you often, but opportunity doesn't. Don't count yourself as the many who will look back one day and said "If I only knew then what I know now".

Opportunity is Knocking

Posted at 3:26 AM, Nov. 28, 2007

Okay, I have to say I have been stumpt by the recent behavior of buyers and their retreat from the housing market. Am I surprised, no.

With media headlines continuing to feed on the fear factor, buyers have all but vanished from sight. Even the best looking properties with the most to offer are sitting off to the side without so much as a peek from lookie-lous. What is the concern? That the market will continue to plummet and any money invested would be sucked into this vortex known as forclosure? It is downright criminal how selected cases of misfortune have become the mainstream in the minds of so many potential buyers. The mortgage industry is not the big bad wolf waiting around the bend to pounce. Speciality products are not evil, just misused.

So at a time of year when there are plenty of good deals to be had, despite current market conditions, I find many of my potential buyers shutting their doors on opportunity. There are properties right now that even just a couple of months ago, were $20-30K more. But come spring time, sellers will have renewed hope and unless they are hard-pressed, will keep pricing even-keeled. If that wasn't incentive enough mortgage rates on a 30 year fixed are the lowest they have been since early May. Real Estate 101, you make your money on the BUY, not the sale of a home. If you spend $30K less than a neighbor for a similiar property and sell 4 years from now at the same time you'll roughly get the same price. However, very savvy Buyer B who chose to answer the call of opportunity, paid less in the begining, thus, net more in profit. Great deals in real estate RARELY come along when the market is healthy ( I am not talking about the feeding frenzy when people were buying on speculation). Which only goes to demonstrate that the average buyer will not reap wealth in real estate if they are not willing to step out. Even Donald Trump was quoted recently how the time is NOW for great deals in real estate.

"I'd rather wait til the market bottom's out". Listen buyers, if it did, you wouldn't recognize it anyway and unless you plan on buying today and selling tomorrow every buyer can afford to wait out the market for better conditions before selling again. Most importantly, most buyers purchase for a home to live in and grow, not trade them like stock. Chicago is still very stable with employment, which by the way,unemployment is the LEADING cause of forclosures. If you think that by waiting until the market seems safer to buy, opportunity has passed you by. In fact, its doing a dance in your face right now!

Pre-qualification and pre-approval, what’s the Difference?

Posted at 4:08 AM, Jun. 27, 2007

8 Ways to Avoid New Construction Pains

Posted at 3:14 AM, Jun. 25, 2007

New construction purchases have a different set of playing rules than that of resale.  Here is what buyers can expect will happen and how to better prepare themselves for any potential pitfalls when buying a new construction condo.

1.   Use an agent.  I know that sounds self-serving but here is the reality, those friendly people at the sales center are there to do one thing, and one thing only, make the developer money.  They are there to protect his interests, not yours. Not to mention, most developer contracts are structured for the developer, not mutually agreeable parties.  I have seen some that make War and Peace look like an easy read!

2.   If you are wise enough to protect your interests and use an agent, don't go to any open houses or sales centers without them.  As tempting as that might be, you jeopardize their commission and therefore will leave yourself without representation.  The developers are sneaky that way, they know curiosity gets the cat and claiming you as "theirs" is just what they want.  The more ignorant you are to the process and your rights, the easier it is for them.

3.   Prepare for homelessness.  What I mean by that is, depending on how far out the project is, even if they say with a straight face that they can deliver within 60 days of signing the contract, don't bet the farm on it.  In fact, I tell all my clients to prepare for the worst case scenario.  Have a plan B for your things and for where you can live.  Most importantly, have your agent and attorney give you a kick-out clause in the event that the developer doesn't deliver the unit in a reasonable time.  Otherwise, you are stuck!

4.  Don't skimp on the inspection.  Buyers can easily make the mistake that if its new construction, what could possibly be wrong?  Everything!  It's worth it.  In fact, a good inspection closer to closing will also act as your punch list of items for the developer to correct.  But be careful, the inspector is only there to point out material, mechanical or latent defects that are noticible.  Cosmetic items are for you to catch.  You also want to note here that most contracts are not contingent upon the results of the inspection, meaning, you can't back out of the deal because of it.

5.  Once the contract is accepted, pick out your finishes as soon as possible, this will help expedite delivery.  Make sure you note that any items that are above standards, you will be required to pay for at the time of ordering, so choose wisely.

6.  Other costs associated with new construction purchases is the monthly assoication dues.  One of the reasons they are estimated at low amounts is that as one of the first to live in the building, you are responsible for starting up the association with reserves, usually about 2 months worth in addition to your first month's due at the time of closing.  Unfortunately, you are not credited with those two extra payments.

7.  A way to save money is on upgrades.  Have the developer do what would be absolutely a nightmare to do yourself such as hardwood floors, but opt to do other upgrades afterward, such as appliance packages.  You will be surprised how much you can save when you cut out the middle man.

8.  Timing is eveything.  One of the best ways to save big bucks is when you buy.  First phase is the cheapest of pricing, but some buyers can have a difficult time visualizing their new home when its just drawings on paper.  Second phase buyers are the ones that experience the biggest hits, pricing goes up, developers are less negotiable, and any upgrades will cost you.  Third phase buyers or close-out specials are where buyers can get some of the best deals.  The properties are already built, so choosing finishes is usually out of the question, but what would be an upgrade package can often become standards, such as stainless steel appliances and granite countertops.  You may even discover parking will be included.  Last ones in can spend thousands less than the the earlier counterparts.

All in all, buying new is loads of fun, but can also be a painful learning experience.  Don't be lured by the flashy signs and grand opening parties, protect your interests from the beginning is the best bet to buying quality new construction at the best price.