READY TO BUY? DON’T KNOW WHERE TO START?
THIS IS YOUR GUIDE TO
HOME BUYING LEA CWIK REAL ESTATE BROKER Berkshire Hathaway HomeServices Chicago
lcwik@bhhschicago.com | 312.268.7626 leacwik.bhhschicago.com
TABLE OF CONTENTS
TABLE OF CONTENTS 4 REASONS TO BUY NOW ...................................................................... •
Prices will continue to rise
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Interest rates are projected to increase
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Either way you are paying a mortgage
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It’s time for the next step in your life
STEPS FOR HOME BUYING .................................................................... •
Step #1: I Want to Buy
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Step #2: Develop a Plan
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Step #3: I Love this Home
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Step #4: My Offer is Accepted
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Step #5: Apply for a Mortgage
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Step #6: My Loan is Approved
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Step #7: Closing Day
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Q&A .............................................................................................................
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MEET THE TEAM ......................................................................................
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06/12/19
4 REASONS TO BUY NOW
4 REASONS TO BUY NOW 1. PRICES WILL CONTINUE TO RISE •
The CoreLogic HPI Forecast indicates that home prices will increase on a month-over-month basis by 0.7% from July 2021 to August 2021, and on a year-over-year basis by 2.7% from July 2021 to July 2022.
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Prices will continue to increase at varying levels across Chicago depending on macro market conditions and are particular to neighborhood trends and inventory availability.
2. INTEREST RATES ARE PROJECTED TO INCREASE •
According to Freddie Mac’s Primary Mortgage Market Survey (2017), interest rates for a 30-year mortgage remain at 3.99%. Experts predict they will start to rise over the next year.
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This will increase your monthly mortgage payment.
3. EITHER WAY YOU ARE PAYING A MORTGAGE •
You either pay your own mortgage or your landlords — take your pick! Average Chicago Rent: $2,200 x 12 months = $26,400 x 3 yrs. $79,200
4. IT’S TIME FOR THE NEXT STEP IN YOUR LIFE •
The cost of a home is determined by the price and current mortgage rate — both are on the rise!
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According to the latest Rent vs. Buy Report from Trulia, (2016 homeownership remains cheaper than renting, with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
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HOME SEARCH
STEP #1: I WANT TO BUY SET-UP A MEETING •
One-hour meeting with your real estate agent.
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Discuss the home buying process.
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Develop an action plan.
TOTAL REPRESENTATION •
Receive exclusive representation.
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Important to understand the various agent representation/relations: BUYER’S AGENT: represents only the home buyer’s best interest throughout the home buying process.
SELLER’S/LISTING AGENT: represents only the home seller’s best interest through the home selling process.
DUAL AGENT: represents both the buyer and seller ethically and honestly, safeguarding the confidentiality of both clients.
FREE TOOLS & RESOURCES • • •
HomeSnap Lending App InTouch
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MLS KR Reports Realist
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Pocket Listing HomeMap DocuAgent
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STEPS FOR HOME BUYING
STEP #2: DEVELOP A PLAN STEPS FOR A SUCCESSFUL PRE-APPROVAL 1.
Three ways to apply for a pre-approval
FACE-TO-FACE
PHONE
ONLINE
INFORMATION COVERED DURING THE PRE-APPROVAL PROCESS •
Range of purchase price/down payment.
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Income verification, credit history and asset information.
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Determine a monthly payment comfort level.
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Budgeting for closing costs.
2. Start gathering documentation: •
1–2 month(s) of pay stubs
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2 years of W2’s/1099’s/K1’s
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2 years of 1040’s (tax returns)
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2 months of broker/bank statements (checking, savings, 401K’s, etc.)
3. Shop with confidence!
DETERMINE YOUR NEEDS •
Set maximum home buying price, location and criteria.
PROPERTY SEARCH •
Search the database for homes that meet your needs, including new construction.
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Outline the “pros” and “cons” of each property to narrow your search.
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STEPS FOR HOME BUYING
STEP #3: I LOVE THIS HOME YOU FOUND A HOME •
Consider making an offer.
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Ask your agent to pull recent comparable sales information.
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Determine the fair market value of the home.
PRESENTING THE OFFER •
Once an offer is determined, your agent will present to the seller.
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If the offer isn’t accepted, discuss seller’s counter offer with your agent.
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Repeat until an accepted offer is reached.
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STEPS FOR HOME BUYING
STEP #4: MY OFFER IS ACCEPTED HOME INSPECTION — CONTINGENCY #1 FIVE AREAS TO CONSIDER WHEN CHOOSING A HOME INSPECTOR 1.
Qualifications — determine what’s included in your inspection and if it warrants specific certifications/specialties.
2.
Sample Reports — request a sample to determine their style.
3.
References — request contact information from past clients.
4.
Memberships — not all inspectors belong to national/state associations, but memberships often mean additional education.
5.
Errors & Omission Insurance — determine what the liability of the inspector or company is once the inspection is over.
HOME INSPECTION TIPS & STEPS •
Talk with your inspector about also attending the home inspection.
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You will receive a detailed inspection report.
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This report will be forwarded to your attorney. They will notify the seller attorney of deficiencies and will request to repair or credit.
ATTORNEY REVIEW — CONTINGENCY #2 •
Attorney will review the accepted sales contract and handle legal notifications of inspection issues.
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Attorney will attend closing to review all documents with you.
MORTGAGE CONTINGENCY — CONTINGENCY #3 •
Apply for written mortgage application.
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Provide evidence of a written mortgage commitment letter (clear to close).
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STEPS FOR HOME BUYING
STEP #5: MY LOAN IS APPROVED AFTER LOAN APPROVAL •
Once you receive clear to close from lender, the attorney will schedule closing with seller attorney.
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You will receive a Closing Disclosure from lender at least 3 days prior to closing, reflecting the actual terms of your loan transaction, as well as the final amount due (closing costs). CLOSING COSTS: Also known as settlement fees, closing costs are fees charged by the people representing your purchase — lender and other third parties. These fees are typically between 2-5% of your purchase price.
PREPARING FOR YOUR CLOSING DAY DO
DON’T
1.
Do tell your mortgage loan officer or loan originator about all debts or liabilities.
2.
Do continue to make all your payments on time.
3.
Do contact your mortgage loan officer before changing your jobs, quitting your job, becoming self-employed or any changes to your income.
1.
Don’t authorize any inquiries into your credit (that is, don’t apply for any new financing including credit cards, furniture, appliances, vehicles, boats, cell phones, cable, alarm companies, etc.)
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Don’t incur any additional debts, including increases in credit card balances and co-signing for others.
3.
Don’t close any open accounts.
4.
Don’t sign-up with any credit repair or “consolidation” company.
5.
Don’t spend money you have set aside for closing.
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STEPS FOR HOME BUYING
STEP #6: CLOSING DAY SET-UP A FINAL WALK THROUGH •
Preferably arrange walk through 72-hours in advance.
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However, can be arranged as soon as 24-hours.
CLOSING DAY WHAT YOU NEED ON CLOSING DAY •
A valid driver’s license, proof of insurance and the monetary amount your lender told you to wire.
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When buying in Illinois, any amount greater than $50,000 must come by wire. Always confirm with your title company before wiring any amount of money!
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Q&A
Q&A
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MEET THE TEAM
LEA CWIK, REAL ESTATE BROKER
Berkshire Hathaway HomeServices Chicago 980 North Michigan Avenue, Suite 700 | Chicago, IL 60611 (312) 268-7626 lcwik@bhhschicago.com leacwik.bhhschicago.com
MARC CHURHILL, MORTGAGE CONSULTANT
NMLSR ID: 686533 Mortgage Consultant
Prosperity Home Mortgage, LLC 980 North Michigan Avenue, Suite 700 | Chicago, IL 60611 Office (312) 268-0661 | Cell (312) 953-5316 Marc.Churchill@phmloans.com MarcChurchill.phmloans.com
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Prosperity Home Mortgage, LLC Legal Disclaimer as of 05/29/19 | PHM | All first mortgage products are provided by Prosperity Home Mortgage, LLC. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in Alabama, Arkansas, Arizona, Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin. NMLS ID #75164 (For licensing information go to: NMLS Consumer Access at http://www.nmlsconsumeraccess.org/) ©2019 Prosperity Home Mortgage, LLC. STATE ABBREVIATIONS for shortened disclosure …is licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in AL, AR, AZ, CO, CT, DC, , FL, GA, IL, IN, KS, KY, MA MD, MI, MN, MO, MT, NE, NC, OH, OK, OR, PA, RI, SC, TN, TX, VA, WA, WV and WI