How Can You Use an FHA 203(k) Loan?

If you don’t want to pay any out-of-pocket expenses to make repairs on a house you’re interested in buying, the FHA 203(k) loan might be perfect for you.

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Every once in awhile, I come across a buyer who’s interested in a property that needs some remodeling or retrofitting, but the buyer doesn’t want to have any out-of-pocket expenses.

In this type of situation, using an FHA 203(k) loan is one of your best options. There are other programs available at Loan Depot that can take care of repair issues, but the FHA 203(k) is the most popular.

This loan can help you make your next house perfect.

There are two types of 203(k) loans. The first is the streamlined version, which goes up to $35,000. This amount can cover a bad roof, a faulty furnace or air conditioning unit, and any required light updates around the kitchen and bathroom areas. The second is the regular 203(k) loan, which can go all the way up to the maximum limit if you need to do a complete remodel. The key thing to remember is you still have to use part of the existing structure.

The down payment for the buyer is the same as a regular FHA loan—3.5%. Interest rates are typically higher with the 203(k) loan, though, because it’s a rehab loan.

You’ll never find the perfect house, but this loan can help you make your next house perfect. If you have any questions about this topic or are thinking about buying or selling a home in our Chicagoland market, please feel free to give us a call. We look forward to speaking with you.

What's Involved in the Closing Process?

Buyers and sellers alike are often confused about the details of the closing process. Here is a step-by-step guide of what to expect.

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One of the most common questions we get from both buyers and sellers once a contract has been accepted is: “What does the closing process look like?”

Once a contract has been executed, the first thing that happens is the home inspection. Buyers hire a professional inspector to examine the home and while this is happening, the loan application is also in the works. This happens following pre-approval.

The application is held off until the results of the home inspection come through but once they do, then comes an appraisal order.

After the appraisal comes back to value with no required repairs, the underwriting process begins.

At that point, they’ll sign off on the loan and we’ll issue a clear-to-close. Assuming everything goes as planned, this process takes about 30 days from the time the contract hits to the time you actually close.

The next step is for a real estate broker to perform a final walk-through with the buyer to ensure that the property is in an agreed-upon condition.

This process takes about 30 days from the time the contract hits to the time you actually close.

After this comes closing. Here in Illinois, many buyers use an attorney who will go through all the loan papers, mortgage, and other documents to make sure things are in order so that the title officer can disperse out on the transaction.

Finally, the seller is paid. This is also the point where a seller will receive a check in the event that they’ve overpaid.

If you have any other questions or would like more information, feel free to contact us by sending an email or giving us a call. We look forward to hearing from you soon.

Should You Be Worried About the Recent Interest Rate Hike?

Interest rates are on the rise again, but is it really a cause for concern?

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Interest rates are on the rise again and it could have an impact on you if you're thinking of buying and/or selling a home.

Right on schedule, the Federal Reserve raised interest rates mid-June by 0.25% and they're expected to raise them again at least one more time before the end of the year. This means interest rates for homebuyers will go up, but things like car loans and home equity lines of credit will go up as well. Credit card rates will rise, also.

The good news is that the Fed is acting on schedule.

Homebuyers seeking financing will also qualify for a little bit less in terms of purchase price. It won't be a huge impact—depending on your mortgage amount, the monthly cost will increase by about $50. The good takeaway is that the Fed acted on schedule with this increase; when unexpected things start happening with interest rates is when things can get sticky.

As jobs and the market improves, the Fed will raise rates to combat inflation, so it's a good sign for the economy. If you have any questions about interest rates and how they affect you when buying or selling real estate here in the Chicago area, give us a call or send us an email soon. We'd be glad to help.

How to Buy Your Next Home With a Contingency

There are two types of home sale contingencies that can have a big impact on your home sale and your ability to buy your next home.

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There are two types of home sale contingencies when a seller needs to sell their current home before they can buy the next one.

First, there's the contingency on sale day. In this case, the buyer has either listed or not listed their home yet, but regardless, it's not under contract, so they haven't closed. Under these circumstances, the seller may be apt to accept the offer, but unfortunately for the buyer, the seller can still market the home. If another buyer comes to the table with a better offer, the first buyer will typically have a day or two to either drop their contingency or back out of the deal and get their earnest money back.

The contingency on close is common with move-up buyers.

Then, there's the contingency on close. In this case, the seller will have their home listed and have a contract in place; all they have to do is go to the closing table. It's a much stronger contract. Under those terms, the buyer can still do their due diligence while waiting for their home to close. If the sale doesn't work out, then the contract is terminated. If the deal closes, then the buyer can close on the next home.

Homebuyers need to be aware of a few things with these contingencies as well. First, you need to find out if you can qualify for both homes at once if you want to buy the new one before closing the sale of your current home. This is a common scenario for buyers who are trading up into a newer, nicer, or larger home.

If you have any questions about home sale contingencies or about buying and selling a home in the Chicago market, give us a call or send us an email. We're here to help.

5 Things for Homebuyers to Consider

Location may be the most important consideration for homebuyers, but it’s not the only factor in making a decision. Here are four other items that play a role as well.

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We all know that when buying a home in Chicago, location is the most important factor. However, there are a number of other things you should consider when deciding where you want to purchase your next piece of property. Here are the five top items on our homebuyer checklist:

1. School district. Many people move to different areas because of the nearby school districts.

2. Transportation. What’s the commute like to work or to school? Are you near the metro? The blue line? The red line?

3. Lifestyle. Do you want to live in the hustle and bustle of the loop? Do you want to have a quieter life out in the suburbs? The area you want to be in will depend on where you are at in your life.

4. Resale value. You have to think about the resale value of the home down the road. Are you more likely to gain equity or lose it if you hold on to the home for 10 or 15 years? Have a licensed agent help you determine your potential return on investment.

Have a licensed agent help you determine your potential return.

5. Local amenities. Do you want to be close to shopping? Entertainment? Restaurants? Maybe somewhere out in the suburbs.

If you have any other questions for us about buying a home or anything else relating to real estate or the mortgage industry, give us a call or send us an email. We look forward to hearing from you soon.