FHA Property Requirements for Appraisal

FHA PROPERTY REQUIREMENTS

FHA appraisals require repairs for conditions that rise above cosmetic defects, minor defects, or normal wear and tear.   Appraisers must report ALL deficiencies.  This information will assist your confidence that when a contract is accepted, property condition should not be a deal-breaker for you in terms of the appraisal.

What Does the Appraiser Look for?

So, what does the FHA appraiser look for during this process? The primary areas of inspection are the roof, the foundation, lot grade, ventilation, mechanical systems, heating, electricity, and crawl spaces (when present). Continue reading “FHA Property Requirements for Appraisal”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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How Is Your Credit Score?

What goes into FICO® Scores? from FICO B2C Scores on Vimeo.

Your credit score is not the only determinant of whether you qualify for a mortgage loan but it is an important one. Having a great credit score may also help you get better terms for your mortgage. However, many people are confused about how the credit score is determined. Continue reading “How Is Your Credit Score?”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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5 Tips to Improve Your Credit Score

improve your credit

I remember years ago hearing a speaker talk about how credit scores are calculated.  I never forgot this valuable information and, to this day, use that knowledge in talking to my home buyers.  Improving your credit score is not an overnight process but once started it can really give you a sense of accomplishment.  One thing to note is that improving your credit score may help in getting you better mortgage terms as well as other credit options.  Here are some tips:

Managing Your FICO® Scores from FICO B2C Scores on Vimeo. Continue reading “5 Tips to Improve Your Credit Score”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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Are You Getting the Best Mortgage for You?

Are you getting the best mortgage for you?  Mortgage lenders have minimum qualifying guidelines for getting a mortgage. Most of these guidelines are dictated by the government entities like Fannie Mae, Freddie Mac and FHA. The individual lender may also add its own layer of qualifying guidelines.  These guidelines include such qualifying factors such as work history, down payment, minimum credit score, and debt to income ratio.  The guidelines differ based on the type of mortgage.

Meeting the minimum guidelines will ensure that you qualify for the loan and determine how much you can receive for a mortgage.  Most borrowers will check to see if they qualify and then proceed with shopping for the home.  However, is it possible that you can get a better mortgage? Maybe. Continue reading “Are You Getting the Best Mortgage for You?”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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Tips to Buying Your Chicago Condo

Are you thinking of buying a condo in Chicago? The condo market in chicago lakefront condoChicago remains hot as companies continue to move from the suburbs to the city.  There is also the draw of all the amenities and things to do in the Loop area.  In addition, for those not wanting to deal with exterior maintenance, condos are a great option.

The condo market in Chicago continues to  experiencing a seller’s market in terms of tight inventory levels.  The supply of condos / townhomes is 8.8% lower in Chicago than August  2016 levels.  However, despite the tight supply of condos available, the number of homes sold in the last 12 months is slightly higher than prior year levels.   The median sales price is also moderately higher. Continue reading “Tips to Buying Your Chicago Condo”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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Avoid These Two Big Home Mortgage Mistakes

home mortgage process

We all know that searching for and viewing potential homes is the fun part of the home-buying process. The not-so-fun part?  The home mortgage process.

However,  if you don’t pay attention to the details, your mortgage can end up dragging down the enjoyment of your new home and cause some major regrets. Here are a few mistakes to avoid to ensure that you love your home mortgage terms as much as your new home. Continue reading “Avoid These Two Big Home Mortgage Mistakes”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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What to Expect in Your 2017 Home Search?

Are you searching for a new home in 2017?  What should you expect?

Prices Have Risen

The median sales price in the metropolitan Chicago area has risen 22% since July 2014 levels.  However, despite concerns at the end of 2016, interest rates remain historically low.  Many buyers this summer have purchased with rates under 4%.

Home values have bounced back significantly since the crash.  However, the average median price compared to 10 years ago is still lower for the overall Chicago metropolitan area. For areas hit hardest by the foreclosure crisis, many remain significantly lower than price levels 10 years ago. Continue reading “What to Expect in Your 2017 Home Search?”

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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Are You Planning to Buy in Spring 2018?

 

home for sale

Many potential home buyers still use spring as their target to “start looking” for their new home.  If you are planning to buy your home this spring, there are some things you can do now to be ready to GO in the spring.

Speak to A Mortgage Lender

Speak to a mortgage lender now to see if there are any issues with your credit, debt levels or income. A good loan officer will outline any “tweaks” needed and give you a loan amount you should qualify for if everything is in order.  Qualifying for a mortgage involves more than a good credit score and decent income.  An early start in making sure your finances are in order will make for a less stressful home search later.

In your conversation with your loan officer, you should also have a discussion about the different loan products available. Many people will automatically go for an FHA loan (which is great for a lower down payment) but you should also consider whether the other loan alternatives may be a better option.   Also, are you getting the best interest rate?  Note that there are other loans other than FHA which have lower down payments.  Conventional loans are now available as low as 3% down.  Conventional loans also don’t have many of the property condition requirements that FHA loans have.  Finally, conventional loans definitely make buying a condo or townhome easier.

Loan Down Payment

Regarding the down payment, most loans will require a down payment.  Down payments generally range from 3.5% for FHA up to 20%.  If you don’t already have the money saved, you will need a plan for getting it or closing the gap of what’s needed.  Your loan officer should also let you know about closing costs for your home purchase.  Typical closing costs are mortgage origination fees, attorney costs, escrow of property taxes, etc.  Expect about 3% of the purchase price.  Often, these can be negotiated as part of the offer but not always.  Again, you should have a plan for taking care of this cost.  You may also want to talk to your lender about available public funds (such as the IHDA down payment assistance program).

Interest Rates

Interest rates rose in the last weeks of 2016. In addition, the Federal Reserve announced that it expects to increase rates further in 2017. However, forecasts don’t expect rates to rise past 5% by year end 2017.  The importance for buyers is that an increase in mortgage increase rates may affect the selection of homes that are available to you.

Property Taxes

Property taxes may make a significant difference in how much home you can afford so you want to pay attention to this figure when you are looking at homes. In Chicago, property taxes are fairly affordable (especially for homes valued under $250,000).  However, in some of the suburban communities, property taxes can be pretty significant for even modestly priced homes.

Selling Before Buying

If you will need to sell your home before buying, there are some things that make sense to do now. If needed, now may be a good time to do those small repairs around the house that might be issues for potential buyers.  Are there rooms that would show better with a little de-cluttering and fresh paint?  Is your furnace more than 20 years old? Are the harvest gold kitchen appliances screaming from the 80’s?  Is the carpeting soiled or worn?  You may not be in a position to make major investments in the home you are selling but are there affordable investments that will counter the impression of your home being dated or lacking proper maintenance?  The investments made toward improvement or repairs should increase either the marketability or market value of your home.  Talk with a realtor so that you get a feel for the impact of these changes on the marketing of your home.

List of Wants and Needs

Now for the fun part …. Determine your wants and needs for your new home. It will help maximize your home search time if you already have a good idea of what’s important to you.  Think about location, schools, your lifestyle and which architectural styles appeal to you most. Do you want a family room, attached garage, big backyard, updated kitchen, etc?  What are your deal breakers?  The clearer you are in what you want, the easier it is for you to find your dream home.

Exit Plan from Current Home

Finally, what’s your exit plan for your current residence? If you rent, how will you handle it if you close earlier or later than your lease expiration date?  Do you need to discuss this with your landlord?  If you own your current home, do you need to sell it first? If you are selling your current home, call a trusted realtor to determine the value of your current home and get an idea of what you can expect to net from sales proceeds.

Buying a home requires some planning.  If you’d like a consultation to discuss buying your new home, please contact me.

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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Do You Need to Buy and Sell Your Home at the Same Time – Don’t Stress.

 

buy sell home

The process of buying your new home is way more complicated when you have to sell your current home too. Many homeowners are either intimidated or confused about the process but you can avoid some of the stress.

The ideal situation, of course, is to be able to purchase your new home first and then deal with selling down the line.  However, for most people, that is not realistic. Unless your current loan is paid off, you would be responsible for paying two mortgages.  In addition, outside of the financial burden, two mortgages are also likely to kick your debt to income ratio above acceptable levels for mortgage qualification.

Many buyers will need to buy and sell simultaneously.  This is doable with some advance planning.

Know the Market First

Before you start, make sure you have a solid understanding of both  the local housing market where you live and where you are planning to buy.  Is the market weighted toward buyers or sellers? This will affect both the pricing strategy for selling your home and set expectations for buying in the new location. You’ll also want to have a market analysis or appraisal done for your current home so that you have an estimate of the market value and expected proceeds from the sale of your home.  You’ll want to be sure that the proceeds from the sale of your home can not only pay off your existing mortgage but leave enough for the funds needed to purchase your new home (if that’s needed).

Talk to a Lender

Mortgage guidelines have likely changed since you bought your current home.  Your credit score and income might be great but if you bought during the housing bubble, you’ll find the process and guidelines much tighter than before.  Income documentation, debt to income ratios, impact of student loans are all things that may have changed and may impact your loan qualification. The lender will also be able to let you know the loan amount that you qualify for.

Decide Whether You Will Buy or Sell First

Should you buy first, then sell – or vice versa? Both options have their pros and cons.  Selling first makes getting a mortgage easier, but it also means you may need to find a temporary place to live.  Buying first means moving will be easier but you’ll be carrying two mortgages. This may not be financially feasible and it may make it harder to you to qualify for a new loan. Whichever order you decide, figure out how you will handle any wrinkles that may arise.

Know Your Solutions

If you are selling first, you’ll need to plan for the storage of your stuff and find options for a short term rental. One possible option to avoid two moves is the inclusion of a post-close possession clause in the contract.  With this option, you would make an agreement with the buyer of your home that allows you to stay in your home after closing and pay rent to the buyer for the period of time needed for you to close on your new home. This option may be less likely to succeed in a buyer’s market where the greater supply of available homes gives buyers less incentive to make this compromise.

If you are buying first, there are a couple of different options to decrease your financial burden and risk:

  1. Contingency on the Sale of Your Home – You may be able to include a contingency in the purchase contract where there is an agreement that the purchase of your new home is contingent on the sale of your existing real estate. This is more acceptable to the seller if you already have an accepted contract on your existing  home.  The option may be a challenge in a seller’s market where the stricter supply of homes favor sellers and make them less likely to make the compromise.
  2. Bridge Loan – A bridge loan is a short term loan that gives you the additional funds needed to carry two loans. The loan would be paid off from the proceeds of the sale of your existing home.  You would need to make sure that the sales proceeds allow you the funds needed to purchase the new home and pay off the bridge loan.  Do your research before committing to this option.

Don’t Let Fear Push You into a Bad Decision

Some of the uncertainty in this process can be managed by planning carefully. As stated above, know your market so you can price your home appropriately which should reduce the time on market. Take the extra step of getting pre-approved for your home loan rather than just pre-qualified. Also, plan upfront for the potential of things not going smoothly so that you won’t be forced into making a bad decision.  You may want to know your options for a short term rental (or staying with family) in case you end up selling before taking possession of your new home. Finally, have more than one home in your basket of alternatives for purchase in case there is a problem with your first choice.  If you don’t plan, you may feel forced into accepting a low bid on your current home or compromising on the things you want in your new home.

Selling and buying a house simultaneously can be stressful – but careful considering and planning can help mitigate the stress.

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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Renting vs Buying Your Next Home

Renting vs Buying Your Next Home

renting vs buying

Renting vs buying your next home is completely a personal decision.  There is no right or wrong just what feels right or wrong for you.  Each option has its own set of pros and cons.

Pros of Renting:

  1. Not tied to the home – if you are new to a city and unfamiliar with the different neighborhoods, renting allows you to get to know your new home city before settling on a neighborhood or subdivision.
  2. Your desired neighborhood or community is too expensive for you to buy in but there are affordable rental options.
  3. Not responsible for home maintenance – renting puts the responsibility of home maintenance on the landlord

Cons of Renting:

  1. Limited control – it’s the landlord’s property so he/she makes decisions about whether you can paint the walls or have family or friends move in temporarily.  They also control how quickly things are updated or repaired.
  2. No tax deductions on rent – Your landlord gets the tax benefit from owning the home not the tenant.
  3. No control over paying the mortgage – You are paying for the right to occupy the space.  However, the landlord is responsible for paying the mortgage. This was a harsh reality during the foreclosure crisis. There were many instances during the crisis where the tenant responsibly paid the rent but the landlord was not as responsible about paying the mortgage.

Just as renting can be the right decision for some, buying your next home can be the right decision for others.

Pros of Buying:

  1. Your monthly mortgage payment is often less than rent – the mortgage (principal + interest) for a $200,000 home in today’s market is less than $900 per month. Interest rates are typically less than 4%. Even with property taxes included, your monthly mortgage can be significantly less than rent for a similar home.
  2. A monthly mortgage is a fixed payment compared to a rental payment which often has an annual increase. You can also pay off the mortgage and eliminate the expense (leaving just the property taxes). Renting is a perpetual expense.
  3. Owning a home often gives an increased sense of stability. Homeowners generally feel a stronger commitment to the community and feel more security about their home.
  4. Control over your property – paint the walls polka dot, upgrade the kitchen or feel free to have guests and family move in for a few weeks or a few months.
  5. Tax benefits – owning a home allows deductions for mortgage interest and property taxes which can be significant. This is an important benefit for many people.

Cons of Buying

  1. Short term costs of buying – although the monthly payment may be less than renting, buying a home involves having enough for the initial down payment and closing costs. Many renters find it difficult to save for the initial costs of buying a home.
  2. Home Maintenance – if there’s a leak in the pipes or the furnace goes bad, you are responsible as the homeowner.
  3. Tied to the home – there is less flexibility in terms of moving when you own versus rent.  Relocating for a job or changing neighborhoods for a better school district is more complicated when you have to sell before moving.

There’s just no right decision in regards to renting vs buying your next home. It just depends upon what’s important in your life and what are your current circumstances.

Millie C Lumpkin
Broker
Stages Real Estate
Phone: (312) 217-5644
Email:     millie.lumpkin@gmail.com
Website: ChicagoSouthHomes.com
Blog:       ChicagoSouthRealEstateBlog.com

 

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