Buying a home in the Chicago metro area can be quite overwhelming and a complicated process unless you break it down into manageable steps that are easier to understand.
If you are like most buyers, the first step of the home buying process will be to obtain a Chicago metro area home loan.
And the first thing you will need to do is decide what type of home loan is best for you and how much house you can actually afford.
It is recommended that you shop around for the best mortgage deal and learn how to negotiate with various lenders and brokers. You will also want to get familiar with loan terminology, what’s involved in the mortgage process and finalizing the deal.
Before you even begin shopping for a Chicago Metro real estate property, you will want to get a loan pre-approval. Getting pre-approved means that your lender has reviewed and verified your income, credit and assets to ensure that you can make the necessary monthly payments on a house.
Your lender should tell you exactly what you need, but be prepared to include:
- W2 statements (or 1099 income statements) for the last two years
- Federal tax returns for the last two years
- Bank statements for the last few months
- Recent pay stubs and proof of other income
- Proof of investment income
Here are some key terms that you will also want to become familiar with during the loan application process:
- Credit report - Request your lender to order one from a third party credit agency such as Equifax, Experian or Trans Union. A credit report should contain information on all your outstanding loans and repayment history, and will typically cost under fifty dollars.
- Application/processing fee – Lender’s fee for determining your capacity as a borrower and will usually be charged upon closing of the loan. Expect a price tag of a couple of hundred dollars.
- Annual percentage rate (APR) – APR is the sum total of all your borrowing costs as a interest rate percentage charged on the loan balance.
- Indexes - Changes in indexes, such as the Federal Funds Rate and the Treasury Bill, used to periodically readjust the interest rates in adjustable rate mortgages (ARMs).
- Points - When mortgage companies are competing by offering lower interest rates, they may charge you a “point”, a one-time pre-paid interest fee, calculated as a percentage of the loan. Points are considered part of the cost of credit to the borrower, and part of the investment return to the lender. They may range from 0.25% to 2% of the loan balance, and are usually paid up front. One point equals 1%.
- Appraisal cost – Fee charged by an independent appraiser who may be hired by your lender to evaluate the property’s purchase price, condition and size in relation to similar recent neighborhood sales. This information is necessary to the lender because it ensures repayment in case the borrower defaults, forcing the lender to sell the property.
- Pre-payment penalties – Prepayment penalty is a provision of your contract with the lender that states that in the event you pay off the loan early, you will pay a penalty. Penalties are usually expressed as a percent of the outstanding balance at time of prepayment, or a specified number of months of interest.
- Miscellaneous fees - Miscellaneous costs that may be incurred during the processing of your loan request, such as notary, courier, county recording fees and title company escrow fee,etc.
We have mortgage specialists that we work very closely with and highly recommend, who can assist you with your Chicago metro area home loan financing.
Chicago Metro Area Real Estate Specialists
We have years of experience and extensive training in the home buying process, focusing on Chicago metro are real estate and surrounding suburbs.
Steps to buying a home in the Chicago Metro area include:
Our goal is to provide you with expert advice and exceptional customer service every step of the way. We will listen to your needs and desires, and use that information to assist you in finding the perfect home in the right neighborhood to fit for your lifestyle and needs. Use our Chicago metro area real estate expertise to alleviate your stress and make your home search a pleasant one.
Give us a call today for a list of Chicago metro area homes for sale that are currently available in your area of interest.
Whether you are looking to buy a home or thinking about investing in Chicago IL real estate, we offer a variety of comprehensive real estate services, including REO’s and short sales, in the following counties:
- Cook County IL Real Estate
- Will County IL Real Estate
- Du Page CountyIL Real Estate
- Kane CountyIL Real Estate
- McHenery County IL Real Estate
Adam Balawender, Realtor, CDPE
Real Estate Pro Chicago Re\max, City
Cell Phone: 773.671.4663