Understanding Closing Costs for Buying Your New Home

In addition to the down payment, you’ll also have to pay closing costs as part of the money that you bring to the table for your real estate purchase.  Closing costs are fees charged by those involved New Homewith the home sale (such as your lender for processing the loan, your attorney, the title company for handling the paperwork,  local government offices for recording the deed, etc.).  The average closing costs percentage is usually about 2-5% of the purchase price.

Your lender will give you an estimate of closing costs on the purchase of a particular house you’ve selected. This is called a “Good Faith Estimate” (“GFE”). The Good Faith Estimate is provided by the lender shortly after loan application is received.  There is likely to be some difference between the initial Good Faith Estimate and the final closing costs but they do give you a good idea of how much money will be needed for closing.  The actual “Settlement Statement” (aka “the HUD” or “the HUD-1″) is the final and complete form with all the numbers for the sale (including the actual closing costs).  It is provided 1-2 days prior to closing.  Your attorney will generally receive the information from the lender and provide you with the figure.  Starting in October 2015, lenders will be required to provide the final statement of closing costs to the buyer 3 days prior to the close.

Here are typical closing costs for the buyer:

  • A fee for running your credit report.
  • A loan origination fee, which lenders charge for processing the loan paperwork for you.
  • Attorney fees.
  • Discount points, which are fees you pay in exchange for a lower interest rate.
  • Appraisal fee (the appraisal is a determination of the market value of the home to ensure that sales price (and loan amount requested) is appropriate.
  • Survey fee, which covers the cost of verifying property lines.
  • Title insurance, which protects the lender in case the title isn’t clean.
  • Title search fees, which pay for a background check on the title to make sure there aren’t things such as unpaid mortgages or other liens on the property.
  • Escrow deposit, which is a reserve amount for future property taxes, home insurance and private mortgage insurance payments.
  • Pest inspection fee.
  • Recording fee, which is paid to a city or county in exchange for recording the new land records.
  • Underwriting fee, which covers the cost of evaluating a mortgage loan application.

For a cash purchase, there are still closing costs but a lot less since there is not a loan.  The closing costs for a cash buyer primarily include:  attorney fee, title insurance fee and other title related costs, and government recording fees.

Often, the negotiation process includes a request for the seller to make a contribution toward the buyer’s closing costs.  This can help reduce the amount of cash needed at closing.  This request is generally part of the initial purchase contract.  There may also be state and city funds available for down payment and closing cost assistance.  In Illinois, there are funds available up to $5,000 in 2015.   Click here for link to Illinois Housing Development authority for more information about state grants for home buyer assistance.

If you are looking to buy or sell in the Chicago area market, call or email me.  I look forward to earning your business.

Millie C Lumpkin, CDPE, SFR
EXIT Strategy Realty
Phone:     (312) 217-5644
Email:      millie.lumpkin@gmail.com
Website:   http://ChicagoSouthHomes.com





The Chicago Condo Market is Hot!!


The condo market in Chicago is hot!  Like the overall market, condos are experiencing a seller’s market and prices are rising (the median sales price for condos in Chicago is 7.4% higher than prior year levels).  Condos are attractive for those not wanting to deal with exterior maintenance and in Chicago — the location and amenities.

For those considering a condo purchase, there are a few things to keep in mind:

    • Financing: Financing for condos is more difficult than a single family home.  Credit score requirements are higher and the condo association has to meet certain requirements in addition to the borrower.  The biggest condo association qualifications that tend to be problematic are:
      • Less than 15% of association fees delinquent for 60 days
      • Less than 50% investor/renters
      • Adequate reserves in association budget (10% of budget)
      • Lack of condo association – with no association it will be very difficult to get financing
    • Association Fees: The association fees cover the costs of the property taxes on the building, utilities for the common areas, exterior maintenance, etc.  You want to be certain what amenities are included in the association fee.  With condos, the monthly association fees can sometimes be fairly pricy.  You want to factor in the amount of the monthly association fees in addition to the purchase price.  Often, the loan amount that you qualify for can be impacted by high association fees (it affects the amount of your monthly housing payment).
    • Special Assessments: Condo associations will levy special assessments for projects such as roof replacement and other capital improvements.  In addition, a building in great shape may need to shore up the budget reserves with a special assessment if needed.  Ask about any planned special assessments and the history of them in recent years.  You can request this information from the seller or association during your attorney review period.
    • Restrictions in the Bylaw: The condo’s bylaws set up rules and restrictions for the condo owners in the building.  It is recommended that you review these as part of your due diligence.  Some associations restrict the renting of units so if your future plans are to rent your unit for income, this may be an issue.  There may also be other restrictions that impact remodeling, etc.  Do your homework before you close.
    • IL Condo Act: This act in Illinois applies to the purchase of foreclosed condos only.  It basically holds the buyers of foreclosed condos responsible for paying up to 6 months of past due condominium assessments and all the legal fees associated with the association’s attempts to collect those assessments. You will want to confirm whether there are delinquent fees prior to the offer or definitely during the attorney review period.  Again, this is only an issue for foreclosed condos.
  • Other Concerns: Some other concerns when purchasing condos are whether parking is included (a real issue in some Chicago neighborhoods) and is there pending or existing legal action against the association.

Even though there are concerns that need to be kept in mind, a condo can be a great option for many people.  These are just items to routinely check off to minimize unexpected and unwelcome surprises.  If you have questions or are looking to buy and sell in the Chicagoland market, please give me a call.


Millie C Lumpkin, CDPE, SFR
EXIT Strategy Realty
Phone:     (312) 217-5644
Email:      millie.lumpkin@gmail.com
Website:  http://ChicagoSouthHomes.com




Choosing the Right Chicago Neighborhood for Your New Home


As a future homeowner, you put a lot of thought into what you want your new home to be. You decide on how many bedrooms, and features like the garage, finished basement, fireplace, master bathroom, etc.  Equally important is finding the right neighborhood to make your house or condo feel like home.

In determining the right neighborhood, there are several points to consider:

  • Availability of homes in your price range
  • Amenities in the neighborhood that are important to you, i.e., shopping, parks, stores
  • Commute to work
  • Proximity to expressways or public transportation
  • Schools
  • Crime rate

Click here for a great resource for community information by zip code.

In today’s home buying world, potential home buyers are not waiting for their real estate agent to send them home listings. They are on the internet searching for homes that catch their interest and taking an active role in finding the homes they want to see.  In the suburbs, it’s easy to search by putting the name of the town in and then searching through what’s available in their price range.  In the city, it’s helpful to know the zip code in the desired neighborhood.  See below for a map of Chicago zip codes.

As you view homes in the neighborhood, you’ll get a “feel” for the neighborhood but a little objective data is sometimes helpful in firming your decision.  Here are some helpful tools for your home buying decision making.

Chicago public schools belong to one big district, 299.  However, not all schools are created equally. For information on the schools in your neighborhood (whether private or public), a great place to start is online.  Here is a helpful website that gives information on the specific schools within your zip code or town.  It includes ratings, parent reviews and test scores.  Click here for the site.

Safe neighborhoods can be a concern in Chicago.  It’s always great to ask friends, co-workers or family members that may be more familiar with the neighborhood.  You can also get a feel for the neighborhood by driving through to see how well the neighbors appear to maintain their property, are there lots of boarded up homes, does the neighborhood appear quiet (or energetic if that’s more your speed).  There is also information online about crime activity which may be useful.

As you drill down on your wish list for your new home, hopefully these tools will be helpful.  Of course, another critical tool for your home search is a great real estate agent.   I hope you will give me the chance to help you find your new home.



Millie C Lumpkin
EXIT Strategy Realty
Phone:  (312) 217-5644
Email:  millie.lumpkin@gmail.com
Website: http://ChicagoSouthHomes.com


Sellers – Tips for a Successful Short Sale

short sale sign pic

The number of homeowners defaulting on their mortgage has declined compared to a few years ago.  However, in the Chicago area, short sales still comprise a decent amount of the homes available for sale.   In the metropolitan Chicago area, 25% of the homes that sold under $200,000 were a short sale.

Short sales can be frustrating for both sellers and buyers.  For the homeowner, there are some tips for a successful short sale:

  • First, sales prices in the Chicago area have improved in the last 2-3 years. You may be pleasantly surprised to find out that your mortgage is no longer upside down.  Speak to a real estate agent to get an opinion of the current market value for your home.
  • A short sale will not be approved unless there is a legitimate financial hardship. Make sure that you understand your bank’s criteria for a hardship and the bank’s process and documentation needed to consider a short sale. Most banks will have a section on their website highlighting short sales. Contact your bank’s loan modification area for more information.
  • In determining approval for a short sale offer price, the bank is primarily looking at market value not the amount of mortgage owed. Don’t hamper the marketing of your home by insisting on a higher price than the indicated market value.
  • A low ball list price may get a quicker offer but the bank is likely to either reject the offer or ask the buyer to raise their offer. Make sure that your agent does a CMA upfront to support the list price because the bank will be doing their own valuation of market price.
  • Make sure that you understand where you are in terms of the foreclosure timeline. This may determine how aggressive you need to be as far as pricing and in your communication with the bank. The timeline is different for each state. The normal timeline for Illinois is 210 days from the date of initial filing by the bank (usually after 3 months of default on the mortgage).  In recent years, Cook County has taken much longer in the foreclosure process but processing time appears to be shortening.
  • Make sure that you provide all the documentation requested on a timely basis. Most banks have established fairly systemized processes for the short sale process.  The systems have hard deadlines and a delay in providing requested information can cause the short sale process to be discontinued.
  • If you are selling a home with a homeowner or condo association fee, try to stay current. Associations have the authority to foreclose on your home independently of the bank holding the loan. Also, the bank may not be willing to pay these fees.
  • A preliminary title search will help to eliminate some surprises later. If there are multiple liens, e.g., two mortgages, each lienholder will be negotiated with separately. Federal liens such as IRS tax liens will need to be satisfied prior to the short sale.
  • Make sure that your agent is negotiating to have the mortgage deficiency waived (if applicable in your state). One of the primary benefits of doing a short sale is the ability to negotiate the handling of the deficiency. You want the resolution in writing. Be aware that there may be some residual deficiency remaining depending upon the negotiation.  However, without a short sale you don’t have a seat at the table when the decisions are made.
  • Finally, you are selling your home so the normal things still matter. Curb appeal, presentation of your home and marketing still need to be in place.

These are a few tips that should help sell your home as a short sale.  Keep in mind the benefits of the short sale as you patiently wait through the bank’s approval process.  If you are in the Chicago area, I would love to work with you in selling or buying your home.

Good luck.


Millie C Lumpkin, CDPE, SFR
EXIT Strategy Realty
Direct: (312) 217-5644
Email Me: millie.lumpkin@gmail.com
Visit My Website: http://ChicagoSouthHomes.com
Read My Blog: http://ChicagoSouthRealEstateBlog.com

Chicago Foreclosure Trends – March 2015

Nationally, the level of foreclosure activity has declined significantly.  However, in some states, foreclosures continue to be aforeclosure- next exit problem.  It appears that problems remain primarily in those states with a judicial foreclosure process.  Illinois is one of those states.

Illinois foreclosure levels have improved.  Since 2012, foreclosure levels have consistently declined month by month.  However, in March 2015, there was a sharp spike in new foreclosure filings in the city of Chicago.  In March, the number of properties that received a foreclosure filing in Chicago, IL was 200% higher than the previous month and 74% higher than the same time last year.


According to RealtyTrac, the spike in foreclosure activity is not because of increased new mortgage defaults (those actually had a slight decline) but because of a clearing of the backlog in foreclosure cases.  Some of the most stubborn foreclosures are being flushed out of the foreclosure pipeline which has resulted in a dramatic increase in foreclosure auctions and judicial sales.  Hopefully, these homes will soon make their way to the market to increase the available inventory.  Note that although the bulk of increased activity is in Chicago, increases were also seen in nearby communities like Schaumburg, Aurora, Palatine, Cicero and Elgin. The backlog is most problematic for prices at lower end of the spectrum.

One good thing about this increase in auctions and judicial sales is that title to these homes are transferring out of the hands of homeowners.  One problem in Chicago is the presence of “zombie” foreclosures where homes remain stuck in the foreclosure pipeline because banks don’t complete the process of taking title to the home.  Many times, the owner has been in the foreclosure process for years and has little incentive to maintain the home or ends up abandoning the home.  However, it should be noted that as long as owner is still listed on title, they are subject to liabilities attached to the home.  These include:

  • the tax collector may come looking to collect back property taxes
  • an HOA may file a lawsuit to recover unpaid assessments
  • you could be threatened with fines for not complying with housing codes and ordinances (and even face jail time in some instances if you don’t meet repair deadlines), or
  • the local government may send you a bill for yard maintenance, repairs, trash removal, and/or graffiti scrubbing.

For these “zombie” homeowners, the clearing of the backlog is good news indeed.  For buyers, this may also result in a welcome increase to a market needing more homes for sale.

Millie C Lumpkin, SFR, CDPE
EXIT Strategy Realty
Phone:       (312) 217-5644
Email:         millie.lumpkin@gmail.com
Website:  http://ChicagoSouthHomes.com



Bronzeville Neighborhood in Chicago

Bronzeville is a community which enjoys a rich history in the city of Chicago.  In the early 20th century, Bronzeville was known as the “Black Metropolis”, one of the nation’s most significant areas of African-American urban history. Today, the Bronzeville neighborhood in Chicago is a popular neighborhood for many upwardly mobile families because of its proximity to both downtown and the lakefront.  There is also the abundance of graystones which are considered classical Chicago architecture.  In the last 20 years, there has been an abundance of renovations and new construction in the area.  As you travel the neighborhood streets, you’ll see a mix of newer construction alongside graystones that have lasted a century.  You’ll also see condo buildings and multi-unit buildings all which serve to attract a diversity of residents to the area.

Bronzeville also has several points of interest.  Residents are minutes away from Chicago’s lakefront and the establishment of the 31st Street beach and harbor has only increased enjoyment of this location on lakefront.  Also, of interest is the Harold Washington Cultural Center, Sox Stadium on 35th Street and both the downtown museum campus and Museum of Science Industry can be reached within 10-15 minutes.

Property values have remained healthy.  There have been a significant number of foreclosures in this neighborhood but due to the continued interest in the community, investors and potential homeowners have been quick to grab and renovate these properties.  At this time, a typical 3-4 unit  graystone with a quality rehab can easily realize an after repair value of $350-400,000.

If you’re interested in finding out if this community might be a good fit for you, please give me a call or email.


Millie C Lumpkin, Broker
EXIT Strategy Realty
Email:  millie.lumpkin@gmail.com
Phone:  (312) 217-5644
Website:  http://ChicagoSouthHomes.com/search






Understanding the CMA – Important for Both Buyer and Seller

home financing

The preparation of the Competitive Market Analysis (CMA) is the first key step in pricing your home if you sell.  It should also be the first step in determining your offer price if you’re buying.  However, many buyers and sellers (and sadly, some agents) don’t really understand it.  A good CMA will allow you to appropriately price your home at current market levels which will help get it sold.  Homes will get the most attention in the first weeks of being on the market. Having your home overpriced may mean potential buyers will never see your home and you will take a lot longer to sell.  Conversely, you also want to make sure you aren’t significantly below market value (unless you are intentionally doing so to ensure a quick sale).  Understanding how the market value is determined allows you to make savvier decisions during your home sale process.

A good CMA should give you a similar value to an appraisal.  An appraisal will generally pull from the same pool of homes and use similar methodology to determine market value (sales comparison).  Note that this value is based primarily on closed sales.

How are homes in the CMA selected?  A good comp selection is just that … comparable.  You are looking for homes that are as similar to the subject home as possible.  This means similar square footage, similar room count, similar structure, similar condition and similar age.  Where there are differences, the value of the comps should be adjusted to account for the difference.  The fewer differences there are, the fewer adjustments needed in the comparison.  If your home is being compared to homes with clear differences such as inferior condition or fewer rooms (especially bedrooms), the impact on value should be discussed.

You are also ideally looking for homes sold in the last 3-6 months.  This is not always possible but that is the target timeline.  Finally, the comp property should be located near the subject (a 1-mile radius is most often used as distance, sometimes closer in urban areas such as Chicago).  This may be expanded in a rural setting.  If the subject is a condo or townhouse in a complex, comps from the same complex are weighted more.

As either buyer or seller, knowing market value allows you to understand the credibility of the offer or list price.  It is key information for both marketing strategy and offer negotiations.

Millie C Lumpkin, CDPE, SFR
EXIT Strategy Realty

Mobile: (312) 217-5644
Email Me:                   millie.lumpkin@gmail.com
Visit My Website:     http://ChicagoSouthHomes.com
Read My Blog:          

            Search for homes


I’m Not Going To Give My Home Away


In almost every conversation I have with potential sellers, the conversation begins with the line “I’m not going to give my home away!!”   Despite the comps, there is the perception that they are being cheated on the price.  Typically, the conversation will include a list of all the past projects and improvements made on the house.  If it was purchased during the peak of the market, the owner will mention how much they paid for it.  And, of course, the appraised value was this much just 3-4 years ago, how can it be worth so much less?

I am reminded of the caveat used in the stock market.  “Past performance is no guarantee of future value.”  Market valuation– whether you are talking about stocks, cars, housing or anything else—is determined by what current buyers are willing to pay.  The price that buyers are willing to pay is based on the asking and sold prices of today’s choices.  Remember the tech bubble of the nineties?  That was fun while it lasted.  The returns were so high that you could withdraw money and the market would make up the difference within months.  However, after the bubble burst, many of those same stocks were worth a fraction of what they were at their peak.  Markets have cycles.  Financial markets have cycles.  Housing markets have cycles.  Prices in this cycle just benefits the buyer rather than the seller (although prices are increasing).

You are not giving your home away if you sell it at market value.  However, you can be guilty of giving away some of your price. If you insist on initially pricing your home higher than the market value, you give away some of your price because over time buyers lose interest and view homes on the market longer with a perception of declined value. In fact, small incremental price changes often result in homes being sold at less than market value.   As a seller, you want to capture buyers at the peak of interest.  This is usually the first few weeks on the market.

You also might be guilty of giving away a little bit of your price when your home is not presented well.   Exterior curb appeal and a nice interior help your home stand out in any market.  Although the current market has a tighter inventory of homes, buyers can still be picky.  This is a big investment for buyers.  Also, many buyers prefer a home that is in move-in condition.

Finally, you may be giving away some of your price if you don’t allow interior pictures.  Most buyers start on-line and interior pictures are a big part of marketing your home on the internet.  It is documented that homes with few or no interior pictures are not clicked on (viewed) as often as those with more interior pictures.  Buyers and even some agents assume that a lack of interior pictures is an indication of problems with the condition of the home.  They never even request the showing to see how lovely your home actually is.  You want your home properly marketed in the place where buyers are looking.

For those still focused on the costs of past improvements and projects of their home, you just have to let go of the idea that you will get a dollar for dollar return for those past expenditures.  Actually, in most cases, you never get a 100% return of your costs.  What those projects will do is have your home viewed as a comparable home for other homes in similar condition.  The value of your home is compared against other homes with gourmet kitchens, hardwood floors and new roofs.  Often, these homes are selling at a higher price. The fact that you have invested in your home does matter but only in the context of what’s happening in this market not the past.

Millie C Lumpkin, CDPE, SFR
EXIT Strategy Realty

Mobile: (312) 217-5644
Email Me:                        millie.lumpkin@gmail.com
Visit My Website:     http://ChicagoSouthHomes.com
Read My Blog:             http://ChicagoSouthRealEstateBlog.com

            Search for homes

Tips For Successfully Buying A Short Sale


In the Chicago area, many homeowners continue to be underwater in regards to their mortgage.  This is reflected in the percentage of short sales to total available homes in the Chicago metropolitan area.  In February 2015, short sales were 14% of total available.  This is significantly lower than the 30% level of two years ago.  However, for homes priced below $200,000, the percent is 26%.  This is lower than previous levels (44% in February 2013) but still very significant.  For this reason, buyers have to consider whether a short sale is a good option for them. This is especially true given the overall shortage of homes available in our area.

Not all buyers are good candidates for purchasing a short sale.  Here are some issues you should be aware of if you’re looking to buy a home that is a short sale:

  1. It is important that your agent determines the market value vs. list price before submitting the offer. If the list price is significantly below market value, it is unlikely that the bank will approve the short sale.  The bank will be ordering its own BPO (similar to an appraisal) and use that value in determining whether to approve the offer price.  Remember a short sale means that the bank is considering whether to accept a sales price below the loan amount owed by the seller.  This is sometimes a significant deficiency.  Short sales may offer some discount to market value but they should not generally be viewed as a lowball opportunity.
  2.  Short sales can take months to be approved by the bank. If you have a short timeline for moving, a short sale is probably not for you.
  1. Short sales are unpredictable. If you have a hard type “A” personality, you may not be able to handle a short sale. There are several common complications that can derail the approval:  multiple liens, a BPO higher than the market value (the bank may ask you to raise your offer), the bank may press a reluctant seller for a financial contribution toward the sale, or the bank sometimes will transfer the file mid-approval process (at which point everything starts all over).  Surprises are the norm for short sales.  Know your own tolerance for the unexpected.
  1. If your loan is an FHA or VA, you have to be choose your property wisely. These loans have strict property condition standards in qualifying the borrower’s loan.  Generally, the seller does not have the resources or inclination to do repairs.  Make sure that you are not waiting through a lengthy short sale approval process only to be denied your loan.  Of course, you can secure a 203k or other rehab loan to fix the property conditions.
  1. I also usually advise my client to do their home inspection as usual after the offer is accepted by the seller. It is better to find out right away about structural problems or a leaky roof than wait for months for short sale approval.
  1. Finally, make sure your agent is familiar with the short sale process. It’s just easier if at least one of you has been through this before and can anticipate the twists and turns.

The challenges are definitely there for short sales.  However, so are the benefits.  As mentioned, short sales are a material percentage of the supply of homes available.  They are often less likely to need extensive repairs because the sellers are still in the home. Finally, there tends to be at least some discount to a traditional listing. These can be a great option for the right buyer.

Millie C Lumpkin
EXIT Strategy Realty
Phone:      (312) 217-5644
Email:        millie.lumpkin@gmail.com
Website:  http://ChicagoSouthHomes.com

New Conventional Mortgages with 3% down and Other Low or No-Down payment Options

Mortgage lenders are making it easier get approved for a mortgage.

bank pic

Fannie Mae and Freddie Mac have announced a new low-downpayment mortgage program which requires just 3% down at closing, joining other government agencies in offering loans which require little or no money down.

In offering a 3 percent down-payment program, Fannie Mae and Freddie Mac bring yet another financing option to today’s home buyers wanting to minimize their downpayment.  The new 3% down payment program is available for both detached and attached single family homes such as condos and townhomes.

FHA loans remain to be among the most popular low-down payment options in today’s market.  FHA loans require down payments of 3.5% and provide for flexible underwriting standards. Home buyers with less-than-perfect credit may find FHA loans to be more cost-effective than loans via Fannie Mae or Freddie Mac; and simpler to get approved, too.  FHA also offers opportunity for borrowers to include the financing of renovation costs in the purchase loan with the same 3.5% down payment.  This allows buyers to purchase lower priced homes which may need upgrades or repairs.

It is also important to note the interest rate for your chosen loan product.  FHA mortgage rates are typically 25 basis points (0.25%) below rates for a comparable conventional loan.  You want to make sure that between the principal, interest rate, PMI (private mortgage insurance) and any other fees that you are making the best choice for your loan product.  Your loan officer should be able to give you guidance with this comparison.

VA loans are another popular option. Available to veterans and active members of the military, VA loans allow for 100% financing and never require mortgage insurance to be paid.

VA mortgage rates are typically 37.5 basis points (0.375%) below rates for a comparable conventional loan. VA loans are backed by the Department of Veterans Affairs.

Lastly, there’s the USDA loan.  USDA loans are guaranteed by the U.S. Department of Agriculture and, although they’re sometimes called “Rural Housing Loans”, USDA loans can be used in some suburban locations in the Chicago area, too.

USDA loans offer very low rates and allow for 100% financing. They also require just a small mortgage insurance premium as compared to other low- and no-downpayment loans.

Today’s home buyer has plenty of financing options.  In today’s environment of low interest rates and lower down payments, 2015 may be your year to purchase a new home.

If you are looking to buy or sell in the Chicago area market, please give me a call.

Millie C Lumpkin
EXIT Strategy Realty
Phone:          (312) 217-5644
Email:            millie.lumpkin@gmail.com
Website:     http://millielumpkin.exitsellschicago.com/