Illinois Mortgage Rates and News

Illinois Mortgage Rates – Rants, Raves and Consumer Education from a long time Chicago, IL Home Mortgage Banker.

Peter Thompson - Illinois Mortgage Broker
Illinois Mortgage Broker
Peter Thompson

Prospect Mortgage
NMLS # 283204
Direct: 331-333-7093
Cell: (630) 479-6424
Fax: 877-773-1476
1717 Naper Blvd., Suite 300
Naperville, IL 60563
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Alternatives to Low Down Payment for Chicago Area Home Buyers

11th April 2014

Have a young new family? The chances that you have 20% to put down on the purchase of a home aren’t very likely. Without a large sum of money, non-veterans will be heading to the FHA (Federal Housing Administration) for their mortgage, or paying for private mortgage insurance on a conventional loan. Both of these options definitely have their drawbacks one of which being that the fees are substantially high and the hikes in FHA fees have only made the outlook grimmer. Hands holding house

Taking a look at different options and government programs for borrowers without large bank accounts can offer some hope. People who have less than 5 percent to put towards their down payment or people with bad credit probably won’t be able to obtain a conventional loan. So for them, FHA is the way to go. FHA’s mission is to get people with a small savings and bad marks on their credit into a home. FHA will accept a down payment as low and 3.5 percent and a credit score as low as 580. (Many lenders, however, will require a higher score.) One of the many differences FHA borrowers will find is that they can use gifts, rather than money from their savings, to put toward a down payment.

Compared to a conventional loan, the FHA will accept lower income borrowers. “If all your monthly debt payments make up more than 43 percent of your income, you’re probably stuck with FHA, says John Frank, president of Paramount Mortgage in Creve Coeur, MO. On the downside, the FHA fees used to be a lot more reasonable and are now being jacked up. An upfront fee of 1.75 percent is charged per loan which can be financed into the mortgage. Looking at a loan for $150,000, the fee would be $2,625. On 30-year mortgages there’s a 1.3 to 1.35 percent yearly charge adding about $169 to your monthly payment. With fees like that, a conventional loan with private mortgage insurance might be a better option. If you have a good credit score, good income, and a least 5 percent down you can get a conventional loan. Although, borrowers with low down payment may find themselves shopping around in order to find a lender that’s willing.

Borrowers of conventional loans with less than 20 percent down must pay for private mortgage insurance which will protect the lender if they should default.  The price of private mortgage insurance varies with the size of your down payment and your credit score. You are given the option to pay monthly, which would be added to your mortgage payment, or you can just pay upfront. For example, a borrower with a 10 percent down payment and a high 780 credit score would pay 1.27 percent of the loan amount if they paid up front. However, the same borrower with a low 660 score would be paying 2.64 percent. If you decide to pay monthly you would be looking at a payment of about $90 each month for insurance on a $150,000 loan with a 10 percent down payment. Borrowers that pay monthly have an advantage that FHA borrowers do not. They can drop the insurance once amount of the loan drops to 80 percent of the home’s value. This would be a good option for Naperville area home buyers borrowers who are close to having 20 percent for their down payment. If you have any questions, would like a quote or to get pre-approval, give me a call and let me know how I can help.

Let us help you get started in the qualification process and click here for our free pre-qualification form.

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages


Posted in First Time Home Buyers, Miscellaneous, Mortgage Programs, Shopping for a Mortgage, Which mortgage is best for me - Chicago Video Series | No Comments »

Weaker Pending Home Sales May actually be Stabilizing

27th March 2014

In February the NAR (National Association of Realtors) Pending Home Sales Index (PHSI) confirmed a still slowing home housing market. This morning, PHSI showed the eight consecutive month of decline of contract signings.

PHSI is a good future indicator predicting home sales over 30 to 60 days. In February the index was down .8 percent to 93.9 from a revised 94.7 in January. Originally it was estimated that January would show 95.0. This February showed a level 10.5 percent below the index for February 2013, the lowest since October 2011 when it was 92.2.

Sold Home For SaleNAR chief economist Lawrence Yun was optimistic about the import of pending sales data. He commented that he believes the recent slowing of home sales may be in the past while home prices continue to increase. “Contract signings for the past three months have been little changed, implying the market appears to be stabilizing”, he said. “Moreover, buyer traffic information from our monthly Realtor survey shows a modest turnaround, and some weather delayed transactions should close in the spring.”

Looking back to February 2013 all regions are below those levels, however, there was an increase in the Midwest and West. In the Northeast the Index went down 2.4 percent to 77.1 in February, 7.4 percent below last year. The Midwest index rose 2.8 percent to 95.3, still 8.5 percent below last year. In the South, pending home sales dropped to 4.0 percent from an index of 106.3 in January, 9.3 percent below last year. In the West the index increased 2.3 percent bringing the number to 86.1 in February but 16.5 percent below last year.

The forecast for total existing home sales this year are at 5.0 million, which is just below last years, 5.1 million. Housing starts are predicted to increase upwards of 19 percent in 2014, reaching about 1.1 million which is closing to the demand of 1.5 million.

The increase in new home construction will lessen some of the pressure on home prices, said NAR, with the national median existing-home price predicted to increase around 5.5 to 6 percent this year, compared with a jump last year of 11.5 percent.

The Pending Home Sales Index is based on a huge national sample, making up about 20 percent of the transactions for current home sales. In creating the index, it showed that the level of monthly sales-contract activity coincides with the level of closed existing-home sales in the following two months.  In 2001, the first year to be examined, showed that an index of 100 is equal to the average level of contract activity during 2001. In a strange coincidence, the volume of existing-home sales in 2001 dropped to around 5.0 to 5.5 million. A normal volume for the current population of the United States.


Let us help you get started in the qualification process and click here for our free pre-qualification form.

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages


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Some green ways to efficiently boost up your home

7th February 2014

When choosing home improvements to enhance your curb appeal to potential buyers instead of asking yourself who’s the fairest, try asking “Who’s the greenest?” In this day in age, home improvements that boost owner satisfaction and reduce your average utility costs will in turn make your home much more appealing to prospective buyers.Green House

As it turns out, buyers are actually willing to pay up to 10 percent more for new homes certified green, because of the long term savings that will come and in turn this is a better investment, according to the real estate report by Harvard University. Replacing older, less efficient doors and windows would be a great return on investment and sellers would recoup much of the initial cost of the improvement when they sell the home.

Five eco-friendly, money saving, home improvements:

1) Solar Water Heater- Making the switch to a solar power heater can be a big money and energy saver. Hot water solar systems run on the energy given off by the sun. Normally, a traditional hot water system will use 50 to 80 percent more energy than a solar system would, according to Velux America, marketers of solar-powered hot water systems. By using a solar heated system home owners will typically save on their energy costs anywhere from 10 to 15 percent. “While the initial cost of installing a solar-powered system is often higher than installing a traditional water heater, most homeowners find the energy savings allows them to recoup that cost in just a few years," says Jim Cika of solar system manufacturer Heliodyne. "What’s more, homeowners may qualify for a federal tax credit of up to 30 percent of the cost to buy and install a residential solar water heating system."

2) Eliminating Incandescent Bulbs- By the end of 2014, you most likely will not be able to find this type of old-fashioned power-guzzling bulb on the shelves anymore due to Federal law banning them. LED’s and CFL will dominate the market place instead and the on the bright side, no pun intended, you’ll be saving a substantial amount on your next electric bill.

3) Add a Skylight or Upgrade Your Old One- Skylights can be a great energy saver because since they provide a great source of natural light, they can help reduce the need for other artificial light sources thusly bringing down electricity costs. By installing a no leak solar-powered fresh air skylight, one that has automatic rain sensors and solar powered blinds, you’ll be gaining a new source of fresh air and save up to 37 percent on your energy costs, according to skylight manufacturer Velux. Another great thing about this addition is that the cost of these solar powered skylights, blinds, and installation costs are actually eligible for a federal tax credit of 30 percent just for being a green home improvement.

4) HVAC System- Up to half of your total energy consumption, in your standard American home goes to heating and cooling it. EnergyStar says that by replacing an old, inefficient heating, ventilation and cooling systems with more efficient models can exponentially bring down a home’s costs for heating and cooling.

5) Window and Doors- Most people don’t realize the huge amount of air that is lost through poorly sealed doors and windows in both the winter and summer. Upgrading drafty windows and doors to more air-tight models can be a huge savings for heating and cooling costs. In addition to this, replacing doors and windows are among the home improvements that deliver a huge return on investment at the time of resale. You can recoup more than 71 percent of the cost of replacing old windows with new vinyl ones and 73 percent for wooden replacement windows, says Remodeling Magazines Cost vs. Value Report. A new front door could earn you back almost 66 percent for a fiberglass door and up to 85.6 percent for a steel door.

Let us help you get started in the qualification process and click here for our free pre-qualification form.


You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages

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Should Chicago Area Home Buyers get FHA Loans?

14th January 2014

Mortgages with low down payments, the most popular type of mortgage, keeps getting pricier and less appealing as buyers question the worth of obtaining an FHA loan.

On loans backed by the Federal Housing Administration, the mortgage insurance premium has nearly tripled since 2008. Recently FHA changed the rules so that now borrowers must pay for mortgage insurance for the entire life of the loan. House and Money

“FHA loans really used to be a first option for homebuyers with a low down payment,” says Scott Schange, a branch manager for Broadview Mortgage Katella in Orange County California, “Now I see people doing them because they have to and not because it’s their first option.”

The Federal Housing Association allows buyers to obtain a mortgage with a down payment that can be as low as 3.5 %. The underwriting requirements to qualify for FHA loans are general less strict than that of a conventional loan. However, after the most recent change and an increase in many of the fees, FHA loans are seemingly not, a borrowers best option for a mortgage, Schang says.

The purpose of FHA loans, historically, was to assist low-income buyers in purchasing a home. During the subprime boom from 2003 to 2007, not even 10 percent of the purchase loans being originated each year were backed by FHA.

In 2008, after the financial crisis, when mortgage standards became more restrictive, there was increase in borrowers and lenders to obtain and FHA loan because it was simply easier to get. According to the U.S. Department of Housing and Urban Development’s latest annual report to Congress, almost 40 percent of purchase loans by the end of 2009 were backed by the FHA. This number dropped to around 26 percent at the end of the last fiscal year.

Watching the demand for FHA’s grow, HUD tried to increase the FHA’s insurance fund through a series of increases in mortgage insurance premiums. This last increase was set forth in April.

FHA borrowers are charged a yearly mortgage insurance premium of up to 1.35 percent of the average outstanding balances of their loans. The fee is added in addition to each borrowers monthly mortgage payment. FHA also charges a 1.75 percent fee, upfront, when the borrower obtains the loan.

After paying a 3.5 percent down payment, a borrower getting a $200,000 loan, pays $225 per month in FHA Mortgage insurance, and in addition will pay an upfront fee of $3,500. If the borrower keeps that mortgage for 10 years before selling or refinancing, the mortgage insurance fees with total up to around $30,000.

$30,000 is exponentially more than what a borrower might pay for a private mortgage insurance on a conventional loan without an upfront fee. According to estimates from United Guaranty mortgage insurance company, conventional mortgage insurance premiums can be less than half of FHA’s insurance, depending on the borrower’s credit.

“A Conventional loan is generally less expensive for borrowers in almost all cases,” says Brian Goudld, Chief Operating Officer for United Guaranty.

Usually Chicago area home buyers opt for FHA loans simply because they do not have enough money saved up for the five percent minimum down payment that the majority of conventional loans demand. But even these homeowners should explore other options, such as down payment assistance programs, says Rob Chrane, president of Down Payment Resource.

Chrane says that there are various programs offered by states’ housing finance agencies and city our county agencies that buyers can easily overlook. Most borrowers tend to think that their income would be to high in order to qualify for these programs, however, many of them are in fact available to moderate income families as well, Chrane says.

“I can’t say everyone would qualify, but bu the same token, the income limits for these programs are not just strictly to low-income households, “ he says. “:They can range anywhere from 80 percent of the area median income up to 120 percent of median income.”

“And if you find a lender willing to offer conventional loans with less than 5 percent down, mortgage insurance won’t be an issue as some mortgage insurance companies are willing to insurance loans with as little as 3 percent down.”

Let us help you get started in the qualification process and click here for our free pre-qualification form.

Free Home Buyers Guide

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages


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Simplified Mortgage Forms on the Horizon for Chicago Area Home Buyers

9th January 2014

Mortgage borrowers will be receiving more condensed and streamlined disclosures thoroughly explaining the terms of their loans. These new forms have been finalized by the Consumer Financial Protection Bureau (CFPB). The two forms formerly known as the “Know Before You Owe” forms, will replace four separate disclosures that are given to borrowers prior to closing their loans. The intention of these new forms are to make it easier for the borrower to understand the loan terms and reassure them that they are getting the same terms they negotiated without any hidden costs. House and Keys

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make”, said Richard Cordray, CFPB director. “Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding , aid comparison shopping, and help prevent closing table surprises for consumers. Today’s rule is an important step toward the consumer having a greater control over the mortgage loan process.”

Streamlined Summaries

The first form, entitled the Loan Estimate, is a three-page document that will summarize the main terms, estimate of the loan, and its closing costs. Within three days of submitting a loan application this form will be provided to borrowers. This document will also replace the current Truth in Lending and Good Faith Estimate forms.

Make Comparison Shopping less complicated

Among the four forms that we currently use, there is a considerable amount of overlap and duplication. The CFPB has sought to eliminate this by consolidating them into two similar forms that will be given to the mortgage borrowers at both the beginning and the end of the loan process. These new forms are expected to make it less complication for mortgage borrowers to comparison shop among various lenders and compare competing offers. The new forms are also expected to prevent borrowers from being taking advantage of by “bait and switch” tactics wherein higher loan terms are given at closing.

Lenders must begin providing the new the new forms no later than Aug. 1st

Let us help you get started in the qualification process and click here for our free pre-qualification form.

Free Home Buyers Guide

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages


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10 Things all Naperville First Time Home Buyers Should Know

30th December 2013

1. Visit a housing counselor at a nonprofit organization

Because owning a home requires a substantial investment of money, time, and energy, this decision should not be made quickly. A housing counselor would be able to provide objective unbiased advice and recommendations to specifically meet your needs of being a first time homebuyer in the Chicago area.Money House

2. Get your finances in order

Find out what your credit report and credit score is and correct any issues. A credit score will show how often you use credit, how timely your bills and paid, and how much money you owe so this will determine your ability to borrow money. Lenders look at four factors called the four Cs of credit. Credit history, (timely bill paying), capital (money available for a down-payment), capacity (income versus debt), and collateral (the value and condition of the house). You need to make sure that you completely understand what a lender is looking for and what will be most important regarding your finances so that you are prepared to get the best mortgage loan package available to you.

3. Down-payment and closing-cost assistance programs

The down payment is the amount of cash you will pay toward the purchase of your home. Closing costs are expenses over and above the purchase price of a home that you incur by financing and transferring ownership of the home. While normally both are expected to be paid up front, there  are loan programs that allow you to borrow the down payment and closing costs, or at least part of them. Some nonprofit organizations and state or local government agencies can help you with down payment and closing costs through grant money or low-interest loans.

4. Does homeownership fits with your lifestyle?

There are some situations where renting may financially be a better option than buying a home. If you know that you will only be residing in a certain community for under three years, if the economy is not doing very well, if unemployment’s rising, or if your future income won’t provide you with enough money to make your mortgage payment,  and all the other additional financial responsibilities that come with owning a home, then renting may be your best option.

5. Shopping around for all things related to your home purchase

Finding a good loan, the right home, and  professionals with outstanding reputations can save you a ton of money. Try to follow the “rule of threes” by comparing at least three products, professionals or services before making your final selections.

6. Pre-approved for financing before shopping for your home

Prior to purchase, pre-approval will help you know exactly what you can afford and find the best rates and terms in advance of the purchase. Pre-approval is different from pre-qualification, which refers to when a lender calculates how much mortgage you likely can afford based on unverified information. A pre-approval is a guarantee that the lender will loan you a fixed amount of money, as long as the property appraises over the amount for which you are qualified and you buy within a certain time period. There may be a fee for pre-approval, but it helps you shop for a home with confidence by knowing how much you can afford. Let us help you get started and click here for our free pre-qualification form.

7. Selecting a location

Many factors are in play when deciding on the area your home will be in. Research area schools, property tax rates, insurance rates, and crime statistics. Since you are making an investment when you buy a home, the neighborhood should be a prime factor in determining how good an investment your home will be. Spend time thinking about all things that may be important to you when making a decision of this magnitude.

8. Get a professional home inspection

When you make an offer to the seller to purchase a home, you should include a condition, or contingency, for a home inspection that indicates no major problems.

9. Don’t Hurry

Sometimes an enormous amount of pressure is placed on homebuyers to hurry through the deal. It’s easy to be blinded by a “bad deal” when the pressure is on so take your time and don’t get locked into prices or terms that you’re not comfortable with. In the end you’re the one who has to live with your decision.

10. Homeownership will cost more than you think

A lot of first time homebuyers are surprised by the cost and general maintenance of everything involved. Financial experts recommend starting an annual emergency fund which should equal up to three months’ worth of living expenses. Your piece of mind will be worth the trouble.

Free Home Buyers Guide

You can trust in us to get the job done.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company            Chicago FHA Mortgages


Posted in First Time Home Buyers, How Income Affects Mortgage, Miscellaneous, Mortgage Programs, Shopping for a Mortgage, Understanding Credit, Understanding Your Credit Score | Comments Off

Making an Offer: Final Details On Your Home Search

4th December 2013

Once you’ve found the perfect home for you, it’s time to make an offer. Before you commit to anything, make sure this is really the house that you want. Contracts are binding, so once you’ve committed, it’s too late to change your mind. It’s important to know what houses in the area with comparable amenities have sold for. The better you know your market, the better prepared you’ll be for negotiating. A lot of times people will want to start the bidding by coming in with a “low ball” offer. If the sellers are highly motivated to sell, this may work, but more often, a better strategy is to make a realistic first offer. What you offer and what the seller will accept depends on the strength of the market and the circumstances of the seller. Your Realtor can help advise you on how much to offer by showing you what comparable homes have recently sold for.

In real estate, your offer has to be in writing, which means you’ll be using a real estate contract. Most likely you’ll be using a standardized contract that’s used by all the real estate professionals in the entire MLS area, which is almost all of the Chicago area. Because it is standardized, most of the legal details are spelled out in the body of the contract, and aren’t considered negotiable items. You’ve probably been told never to sign anything until it’s been looked at by an attorney. That’s usually good advice, but with a standardized real estate contract, one of the clauses gives you several days after signing during which your attorney can review the contract and make any legal changes. (Keep in mind, your attorney can modify legal issues, but can’t change the terms of the contract.) This allows you to move fast when you’re ready to buy, yet still make sure you are fully protected.

Most of the legal matters of the contract are already spelled out, but there are blank spaces where you fill in details specific to this home, and this offer. This will include the address of the property, your names and the seller’s names, as well as all the negotiable items.

Some of the items that are considered negotiable are:

decisionsimagesCA7LXITKThe price of the home: This is the detail most people focus on, and it is important. But sometimes you are better off if you are more flexible with the price, and work other terms to your advantage.

The amount of earnest money: This is your “Good Faith deposit”. In order for the contract to be binding, you need to offer something of value upfront. The more money you put up, the more seriously the seller will view the offer, but you can make this whatever amount you choose. This money will be applied toward your costs at closing, and if the sale falls through for reasons outside of your control, you’ll most likely get it back.

Items to be included in the sale: You’re buying the real estate, but you want to be sure you are getting what you think you are. Items that are built in are considered fixtures and will stay with the house. But things like window treatments, playground equipment, refrigerators, and washers and driers are considered personal property. If they aren’t listed as part of the sale, they may not be included. If you choose, you can make these items, or anything else, part of your offer.

There are many other details to consider.  Give me a call and I’ll be happy to talk you through all of them.


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Finding the Right Realtor

21st November 2013

A good Realtor can help you a lot. But how do you find the right Realtor for you? Most people know someone who sells real estate. For a lot of people, it’s a side job where they can make good income while working part time (in good times, anyway). But buying a home is one of the biggest decisions you will make in your life. It’s important to find a professional agent who will work well with you, negotiate effectively and be able to handle all the details all the way through the closing. Here are some questions you need to keep in mind when choosing an agent:

How long have they been selling real estate?realtor

Is this their full-time job?

How familiar are they with the area you are looking in?

How many transactions have they had over the last year?

Do they mostly work with buyers or sellers?

How do they approach negotiations?

What professional designations have they earned?

Do they sell many homes in your price range?

The best way to find an agent who will work well with you, is through referral, either from someone you know who was pleased with their performance, or from someone in a related business who has direct experience and knows who the quality agents are. Another way is on the internet. More and more buyers are finding their agents online. If you find an agent with a blog, this can be a way to get to know them before you have any contact with them at all. By reading their posts, you can get an idea of their experience level, personality and what areas they cover. This is becoming a great source of finding agents you might not have heard of otherwise.

Once you find someone you are thinking of working with, another consideration is how comfortable do you feel with them as a person? Until you close on your new home, this will be a close relationship. You need to be able to trust and get along with your Realtor or it will cause friction. You need to know that they are on your side and working toward your goals.

When first starting their search, many buyers will stop by open houses, or call any ad or sign for a property that sounds interesting to them. They’re just gathering information at this point. A recent study found that the average buyer talked with between 14 – 17 agents before buying a new home. You are better off finding one good real estate agent and sticking with them. Through their access to the MLS they can find the answers to any of your questions and they can also put you on a service that automatically sends you all the new listings that fit your criteria. While you are researching the market they can help you gather all the information you need to narrow down your choices. Then, when you are ready to start looking at the insides of homes, you will have a better idea of what is important to you. I can refer some excellent agents to you when you are ready.



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The Home Search: Who Does the Realtor Represent?

12th November 2013

Once you have a range of what you can qualify to buy, you are ready to start looking for a home. But this can be confusing too. There are so many options out there; the internet, ads in the paper, yard signs, real estate magazines, open houses. How do you go about finding the right house for you? Prices can differ tremendously from town to town, and even neighborhood to neighborhood. You have to decide what type of home you want and what amenities are important to you. You have to learn about the school districts, and see what areas have done best with resale value. You need to sort through all the houses available on the market, and narrow your choices down until you know exactly what kind of house is the perfect house for you. In a way, you need to educate yourself on all these different options so that you can make the right choice. But what’s the best way to go about this?

magnifying glass on houseRealtors: Most people turn to Realtors when they begin their search for a home. A key benefit of working with a Realtor, is that they have full access to the computerized Multiple Listings Service (MLS). This means that your agent can view every property listed in the market, and show you new home listings as they become available. They will usually put you on an automatic email search, and they can also give you access on their websites so you can do a lot of the searching yourself.

But good Realtors do much more than just show you properties; they can act as your advocate and guide, steering you away from costly mistakes and helping you make the right decision. A good Realtor provides valuable guidance from your search, through negotiations, inspections and closing. They are experts in the areas they specialize in, and can help you determine trends in a neighborhood’s property values, demographics and the quality of schools. An experienced agent will also have a good feel for a home’s true market value.

A common misconception is that it costs a lot of money to work with a Realtor. The opposite is true. First of all, the Realtor’s commission comes from the seller – the buyer doesn’t pay a thing. One mistake many buyers make is to try and save money by buying properties that are for sale by owner. Sometimes these can be a deal, but more often the seller is selling by himself in order to get top dollar for the property. It’s easy to overpay if you don’t know the market. A good Realtor will help you avoid mistakes as well as find the home that works best for you. If the home is for sale by owner, they can often negotiate directly with the owner. Their knowledge of property values, and their ability to negotiate, can usually save you money.

Agency: One thing you need to be aware of right from the beginning is who your Realtor is working for. The commission is almost always paid by the seller. If you call off of a sign or ad, you will be dealing with the Listing Agent. The listing agent works for the seller, and her job is to sell the property at the best price and terms for the seller. Listing agents do work with buyers, and they can be quite helpful and informative, but their duty is always to the seller. Unless arrangements are made beforehand, any other agent showing you houses is also considered a subagent for the seller. That means that they too are legally representing the seller’s interest.

This isn’t necessarily a bad thing. If you’re working closely with your agent, you often develop a personal relationship with each other. She knows your needs and what you’re looking for. As you work together she starts to think of you as her client.  Also, if she does a good job working with you, you’re likely to refer friends and relatives to her, bringing more income down the road. She has no such relationship with the seller. So on an emotional level, your Realtor is likely to be working in your interest. But legally she is working for the seller.

There is another option. Buyer’s Agency means that the Realtor represents you, not the seller. That means that she will be able to negotiate the transaction for your best interest. The important thing is to discuss your options with your Realtor upfront. This way you know exactly what to expect as you go along.  If I can help clarify any of this for you, please give me a call.  I’m happy to help.


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Some Things to Avoid Before Closing on a Mortgage

6th November 2013

carwithbow2Once you’ve been pre-approved, you are ready to buy as long as there are no major changes in your financial situation. These are some things you need to avoid before you’ve closed on your new home.

Don’t buy or lease a car – Unless you have to, it’s better to put off any big purchases until after you’ve closed on your new home. A large increase in your debt-to-income ratio could be a problem. If you have to buy something, call your loan officer before making any major purchase so they can see how this will affect your mortgage approval.

Don’t move assets from one bank account to another – If you do, we will need to have a paper trail to document the source of funds for each new account or large deposit. If you want to consolidate accounts, it’s better to wait until after you have closed. Either way, call myself or your loan officer before you do transfer funds.

Don’t change jobs – Sometimes this is unavoidable, but many new jobs have a probation period, that is, a time before you are considered a permanent employee. This must be satisfied before we can count your income from the new job. We will also need to show a full month’s worth of paychecks for the new job before you are able to close.

Don’t apply for new credit – Any time you apply for a new credit line, it will show as an inquiry on your credit report. During the loan process the credit bureaus will send us updates any time a new inquiry is reported, and we will then need to see whether any new credit was taken out. If you open new accounts we will hit you with the new payment, which may affect your approval. This often happens near the end, often right before closing. If it is for something like setting up the utilities on your new home, we will just need a written explanation to put in our file. But I often see people buying furniture or big purchases for the new home right before closing. When this happens we will need to show what the new payment will be, add it to your debt ratios and re-underwrite the loan with the new payment. This could delay the closing, or possibly put you in a position where you no longer qualify for the loan. Again, talk with your loan officer before applying for any new credit.

Don’t try to consolidate bills before speaking with your lender – Moving loan balances around can affect your credit score. Even if it lowers your payments, it could cause other problems. Talk with your lender before you do anything major.

As always, please feel free to give me a call to discuss any of these areas of concern and to answer any questions you have about preparing for a closing.


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