Question 1

What's the first thing I should do if I'm interested in buying a home/condo?

Accepted Answer

The first and best thing someone can do once they know buying a home or condo is in their future, is to get pre-approved! 
 
Getting pre-approved is a lot faster and easier than you may think. You'll meet with a lender and talk to them about your financial situation. They'll go over all the numbers and work backwards into a monthly payment that feels most comfortable, coming up with the purchase price from there! It is crucial to do this as soon as possible for several reasons.
 
1) If you get pre-approved early and something comes up with the credit report that needs to be remedied there will be time to fix it and adjust. 
 
2) Getting pre-approved gives you a clear idea of what you can afford. It's best to do this before going to look at options so you know you're looking exactly in your budget. It's devasting when clients fall in love with a home and later find out they won't be able to make an offer because it doesn't fit the budget.

Question 2

How long does it take to close after your offer is accepted?

Accepted Answer

The short answer is an average time frame between an accepted offer and closing is around 30-45 days. This can vary based on the preferred timeline of the buyer and seller.

Question 3

What are closing costs and how does that factor in to the final cash to close number?

Accepted Answer

There are always costs associated with a home purchase. These fees go towards the attorneys, lender, title company, and the city in which you're buying in. 
 
In Chicago, the general rule of thumb is that closing costs are typically 1.5-2% of the purchase price.
 
This percentage can also tend to be a little higher for properties with a lower purchase price since many of these fees are fixed and can skew the percentage higher when the purchase price is lower. 
 
If you're not cash heavy, there are ways to package this extra percentage into your loan so the funds can be financed and it would need to be clearly communicated before making an offer.

Question 4

What is Private Mortgage Insurance (PMI)?

Accepted Answer

Private Mortgage Insurance, also known as PMI, is insurance for the lending institution on loans where the buyer is putting down less than 20%. PMI is much more affordable today than in the past, which is why PMI can sometimes have a negative definition when speaking with older friends and family who have purchased years ago.

PMI is based on your credit score, so if you have great credit you'll have a lower PMI payment. It's also based on the amount you put down under 20%. If you put down 3% you'll have a higher PMI payment than a buyer who puts down 15%. PMI also gets removed from your monthly payment once you hit the 20% loan to value ratio. For a lot of buyers PMI is a reasonable alternative to pulling out more money in cash from their investments or saving up for a 20% down payment.

Question 5

What is the lowest down payment percentage?

Accepted Answer

The lowest down payment percentage is 3% on a conventional loan.

Frequently asked questions

What's the first thing I should do if I'm interested in buying a home/condo?

How long does it take to close after your offer is accepted?

What are closing costs and how does that factor in to the final cash to close number?

What is Private Mortgage Insurance (PMI)?

What is the lowest down payment percentage?

Frequently asked questions

When is the best time to sell?

How does it work if I'm trying to sell and buy at the same time?

What are 4 things that can be done now if you're thinking of selling your home in the near future?