Move into your new home before you start your new job!

Eliminate the concerns about spending money on short-term rental agreements or possibly having to live at home! Graduates with guaranteed employment through employers can close on a new home before graduation. Through verifiable income on a non-contingent offer, you can now be guaranteed a purchase mortgage loan with Key Mortgage Services and close early to better prepare your future.

Experts will tell you: Great deals in real estate are typically made when you buy a home, not when you sell!

Start today by calling me at 312.344.3279.

Thinking about buying your first rental property?

1. You’ll probably need a down payment of at least 20%.

2. The interest rate will probably be an extra 1/4 point (0.25%) to 1/2 point (0.5%) higher for a rental property than an owner-occupied home. So, if you qualify for a 4.0% owner-occupied mortgage, you can probably get a mortgage for a rental property between 4.25% and 4.5%.

3. If you don’t currently have any rental properties, the lender may not consider any potential rental income when qualifying you. You may need to qualify for the mortgage with your current income. After you’ve had a rental property for a year, the lender may let your apply around 70% of the rental income to your income.

There are different mortgages for rental properties. So you should talk with a mortgage consultant who has access to a variety of mortgage products. If you would like the names of some reputable mortgage consultants, call (773.793.4516) or email me! I get no fees for my mortgage referrals.

Trulia’s Rent vs. Buy Index for Q2 2011 shows that if you can buy, but are thinking of renting in Chicago, you might want to reconsider your decision.

Trulia's Rent vs. Buy Map for Q2 2011

Chicago scores a 13 on the Rent vs. Buy Index putting it in the middle of the buy side of the index.

Now offering 3% down condo mortgages!

This means that condo buyers who don’t have the 10% down payment required by most lenders are no longer restricted to buying one of the limited number of FHA approved condos. FHA approved condos qualify for 3.5% down mortgages.

For more details on 3% down condo mortgages call (773.793.4516) or email me.

This summer, Fannie Mae instructed lenders that they should adopt a new policy that would include a second review of an applicant’s credit report just prior to closing. Why? The answer is simple: the credit profile of a borrower may have changed between the time of the initial review of the credit report and the time of closing. How will this impact the home loan?

The potential impact to a borrower who has utilized credit to make significant purchases after the initial credit report could include:
• A delay in closing
• Increase of closing costs and/or interest rate
• A decreased loan amount
• Denial of the loan

That’s right, in the worst-case scenario, a change in credit could even result in a loan being denied – even after an original approval had been granted.
What should homebuyers do (or not do)?

In order to eliminate any possibility of potential problems before closing, anyone in the application process should use credit sparingly and make sure they adhere to the tips provided below by credit expert Linda Ferrari of Credit Resource Corp:

• Don’t do anything that causes a red flag to be raised by the scoring system.
• Don’t apply for new credit of any kind.
• Don’t pay off collections or charge offs.
• Don’t max out or over charge on your credit accounts.
• Don’t consolidate debt onto one or two credit cards.

This list is not comprehensive, but it does give you a peek into situations that could create issues and could also be contrary to some ideas you have read previously.

Guest blogger, Michael Poland, is a senior mortgage banker with Baird & Warner Financial Services in Baird & Warner’s Lincoln Park Office. Michael can be reached at 773.770.7524 or by email at michael.poland@bairdwarner.com.

Advertising for FHA Approved Condos

The purchase of a Rogers Park condo advertised as FHA Approved (not the condos shown left) by my buyer, Art, hit a bit of a snag last week. His mortgage banker, Michael Poland with Baird & Warner Financial Services, discovered that the condo development where Art was buying hadn’t been recertified for FHA approval. Michael immediately offered to help the condo association with the recertification to keep the sale together.

It will probably all work out, but unfortunately there’s been added stress for Art who still doesn’t know for sure that he’ll get financing to purchase his first home. It’s also been a lesson for me not to assume that condos advertised as FHA Approved are indeed currently FHA Approved.

It used to be that once a condo was FHA Approved it remained FHA Approved. That recently changed and now condo associations must be recertified every 2 years.

FHA spot approvals for individual condos have also gone away, but I still see them in condo listings. Some condo owners selling for sale by owner aren’t aware of the FHA rule changes.

For more details on FHA condo approval requirements read the Chicago Tribune’s, “The ABC’s of FHA condo requirements“.

We’ve been getting a lot of questions regarding FHA financing and our 5% down conventional program. We are one of a very few lenders that can offer 5% down conventional financing. I thought it would be a good idea to provide you with a short list of pros and cons for both loans.

FHA Pros
• Allows for higher debt to income ratios. In some cases up to 55%
• Allows for lower credit scores, down to 620
• Allows a borrower to put 3.5% down
• The entire down payment can be a gift

FHA Cons
• Condo buildings must be HUD approved.
• More documentation required from borrower

5% Conventional Pros
• Condo buildings do NOT have to be HUD approved
• Less documentation required
• No upfront mortgage insurance required

5% Conventional Cons
• Debt to income ratio must not be greater than 41%
• Down payment must come from borrowers own funds
• Must have at least a 680 FICO score

Guest blogger, Michael Poland, is a senior mortgage banker with Baird & Warner Financial Services in Baird & Warner’s Lincoln Park Office. Michael can be reached at 773.770.7524 or by email at michael.poland@bairdwarner.com.

Don't let an inept mortgage broker add stress to your home purchase!

A day before my buyer’s mortgage commitment was due the broker informed me that he was going to ask for a 2 day extension which turned into more than a 2 week extension!

While part of the delay was due to the underwriter requesting a review of the appraisal, most of the delay was due to the mortgage broker not having all the paperwork ready. In addition, the broker did a poor job of keeping everyone informed. Repeatedly the buyer’s attorney had to request extensions not knowing what the delay was. My buyer didn’t know if she was going to get the loan or not.

In a typical scenario where there’s only a week or two between the mortgage commitment and the closing, such delays would have pushed back the closing forcing the buyer to put her belongings in temporary storage. The sale could have fallen apart. Fortunately, that didn’t happen.

Home buyers should give as much thought to picking a mortgage broker as they do a Realtor! Contact me for the names of some reputable Chicago mortgage brokers.

Crain’s Chicago Business is reporting that some new condo developments in areas including River North, Lincoln Park, and the West Loop are offering low interest, low down payment financing to spur sales.

Tightened financing for new condo developments has been holding back sales so the banks that financed the developers are now offering attractive financing to condo buyers reasoning that they’d rather have several smaller loans than have the developers default on bigger loans.

Most conventional mortgages for condos require a minimum 10% down payment and rates have been around 5.25% recently. Banks for a few new condo developments are now offering 4.375% 30 year fixed rate mortgages with only 5% down required, even for investors. In addition, private mortgage insurance isn’t required for down payments below 20%. One of the developments offering this financing is Sono in Lincoln Park shown left.

As with any new home purchase, contact me before you visit the sales offices!

Chicago Metro Area home buyers looking to take advantage of 3.5% FHA (Federal Housing Administration) financing for homes priced between $278,000 and $420,500 must close their home purchases by December 31st.

With the current $410,000 FHA loan limit, buyers can have a down payment as low as 3.5% which would let them purchase a home priced up to $420,500. On January 1, 2010 the maximum FHA loan limit for FHA loans plummets from $410,000 to $271,050. The new loan limit of $271,050 with a 3.5% down payment will limit buyers to homes priced $278,000 or less. To use FHA financing and purchase a home priced above $278,000 buyers will have to provide a higher down payment to make up the difference.

Without FHA financing home buyers need a down payment of at least 5% to 10% of the home’s sale price depending on their credit and other qualifying factors.

I highly recommend that home buyers wanting to take advantage of 3.5% down payment FHA financing for homes priced between $278,000 and $420,500 have a contract on a home purchase by November 1st to minimize the risk of their home purchase not closing by the December 31st deadline. That means such buyers need to be looking at homes during the next 3 weeks! Contact me to get started now!