Our Home Buyers Guide offers valuable information to those looking to purchase a new home. If you’re like most people, buying a home is your single largest investment and debt. The home buying process can be one of the most exciting, yet sometimes stressful experiences you will ever go through. This may be true whether you’ve bought many homes or you’re looking to buy your first home.

Home Buyers Guide

Real Estate Millennial Guide

The real estate market has never offered such great opportunities, or been fraught with more risks, than now. There are many factors to consider and many decisions to make when purchasing a new home. That’s why it is crucial for you to have all the available resources necessary to make a well-informed decision.

 

Home Buyers Guide Steps 1 through 7

1. Define Your Goals, Research Your Options, Make Your Plans

Given that buying a home is such a big step, it’s all the more important for you to educate and prepare yourself as much as possible in advance. This means clearly determining why you’re buying and what kind of home you’re looking for. And because buying and financing a home is so closely related, it also means examining your current financial situation and projecting how much you can afford. Once you’ve answered these questions, even tentatively, you’ll be in a better position to research your housing and mortgaging options, as well as create an action plan and timelines for moving forward.

2. Contact a Real Estate Broker

Buying a home, condo or townhome is a complex matter at the best of times, given that there are so many factors to consider and no two homes or transactions are alike. However, with all the unique opportunities and potential pitfalls of the current market, it’s even more important for you to contact a Real Estate Broker once you’ve definitely decided to buy. Our Real Estate Brokers will guide you through the property search, financing, negotiation and transaction processes.

3. Get Pre-Approved For A Loan

Generally, it is recommended that you get pre-qualified for a loan before you start viewing homes with the serious intention of buying. The pre-approval process involves meeting with a lender and authorizing them to examine your current financial situation and credit history. On the basis of this examination, the lender will provide you with a document that details how much you can borrow to buy a home. You may want to consider looking at different mortgage companies to see what different lenders offer.

4. View Homes and Select Ones You Would Like to Visit

You can view homes in our property search to help with what you’re looking for. Put a list together of “must-haves” and “like-to-haves”. There are many benefits to starting the search process at a real estate website. You can view many homes and their details, take video tours and access neighborhood information. But, it’s also important to view homes in person. While their property details may seem similar online, homes can actually be very different in terms of layout, design, workmanship and other aspects. You should view homes with your Real Estate Broker who will notice things you might miss, provide expert analysis, and act as an impartial sounding board.

5. Make an Offer and Negotiate

Now that you’ve found the home you’d like to buy, it’s time to make an offer. Once you’ve written the offer, your real estate agent will present it to the seller. At that point, the process will depend on the kind of market you’re in or if the seller has other offers. Generally, though, the seller can accept your offer, reject it, or counter it to initiate the negotiation process.

6. Secure Your Financing

Once you have a pending agreement, it’s time to go back to your chosen lender to finalize your mortgage details so you can close the deal. This means finalizing your down payment, interest rate, regular payment schedule and any other financial conditions associated with the closing. Because you already met with a mortgage provider and have been qualified for a loan to purchase a home, this phase of buying your new home should be a relatively straightforward matter that centers around finalizing the loan details and signing the mortgage papers.

7. Close The Deal

If you’ve efficiently taken care of everything connected with purchasing your new home, the experience of taking ownership will be a positive joy with no surprises. Key steps to the closing also referred to as the “escrow” or “settlement”, include:

• Getting a Title Search – a historical review of all legal documents relating to ownership of the property – to ensure that there are no claims against the title of the property in Illinois, this is the seller’s responsibility. It is also necessary to purchase Title Insurance in case the records contain errors or there are mistakes in the review process.

• The Final Walkthrough – you’ll be given the chance to look at the home to make sure it’s in the same condition as when you signed the sale agreement.

• The Settlement – typically, on the Closing Date you’ll go to a lawyer’s office or title company to verify and sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments, and transfer taxes. At that point, you’ll receive the property title and copies of all documentation pertaining to the purchase. You will receive keys and possession of the property at the end of closing.

 

Home Buyers Guide Glossary

Abstract Of Title – A complete historical summary of the public records relating to the legal ownership of a particular property from the time of the first transfer to the present.

Adjustable Rate Mortgage (ARM) – Also known as a variable-rate loan, an ARM is one in which the interest rate changes over time, relative to an index like the Treasury index.

Agreement of Sale – Also known as the contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller and buyer agree to transact under certain terms spelled out in writing and signed by both parties.

Amortization – The process of reducing the principal debt through a schedule of fixed payments at regular intervals of time, with an interest rate specified in a loan document.

Appraisal – A professional appraiser’s estimate of the market value of a property based on local market data and the recent sale prices of similar properties.

Assessed Value – The value placed on a home by municipal assessors for the purposes of determining property taxes.

Closing – The final steps in the transfer of property ownership. On the Closing Date, as specified by the sales agreement, the buyer inspects and signs all the documents relating to the transaction and the final disbursements are paid. Also referred to as the Settlement.

Closing Costs – The costs to complete a real estate transaction in addition to the price of the home, may include: points, taxes, title insurance, appraisal fees, and legal fees.

Closing Disclosure – A final statement of loan terms and closing costs. The buyer must receive it within 3 business days before closing. This replaced the old HUD-1 form.

Contingency – A clause in the purchase contract that describes certain conditions that must be met and agreed upon by both buyer and seller before the contract is binding.

Counter-Offer – An offer, made in response to a previous offer, that rejects all or part of it while enabling negotiations to continue towards a mutually-acceptable sales contract.

Conventional Mortgage – One that is not insured or guaranteed by the federal government.

Debt-to-Income Ratio – A ratio that measures the total debt burden. It is calculated by dividing gross monthly debt repayments, including mortgages, by gross monthly income.

Down Payment – The money paid by the buyer to the lender at the time of the closing. The amount is the difference between the sales price and the mortgage loan. Requirements vary by loan type. Smaller down payments, less than 20%, usually require mortgage insurance.

Earnest Money – A deposit is given by the buyer to bind a purchase offer and which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited.

Equity – The value of the property, less the loan balance, and any outstanding liens or other debts against the property.

Easements – The Legal right of access to use of a property by individuals or groups for specific purposes. Easements may affect property values and are sometimes part of the deed.

Escrow – Funds held by a neutral third party (the escrow agent) until certain conditions of a contract are met and the funds can be paid out. Escrow accounts are also used by loan servicers to pay property taxes and homeowner’s insurance.

Fixed-Rate Mortgage – A type of mortgage loan in which the interest rate does not change during the entire term of the loan.

Home Inspection – Professional inspection of a home, paid for by the buyer, to evaluate the quality and safety of its plumbing, heating, wiring, appliances, roof, foundation, etc.

Homeowner’s Insurance – A policy that protects you and the lender from fire or flood, a liability such as a visitor injury, or damage to your personal property.

Lien – A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don’t make the mortgage payments.

Market Value – The amount a willing buyer would pay a willing seller for a home. An appraised value is an estimate of the current fair market value.

Mortgage Insurance – Purchased by the buyer to protect the lender in the event of default (typically for loans with less than 20% down). Available through a government agency like the Federal Housing Administration (FHA) or through private mortgage insurers (PMI).

Possession Date – The date, as specified by the sales agreement, that the buyer can move into the property.

Pre-Approval Letter – A letter from a mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.

Principal – The amount of money borrowed from a lender to buy a home or the amount of the loan that has not yet been repaid. Does not include the interest paid to borrow.

Purchase Offer – A detailed, written document which makes an offer to purchase a property, and which may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the purchase offer becomes a legally-binding sales agreement.

Title – The right to, and the ownership of, property. A Title or Deed is sometimes used as proof of ownership of land. The clear title refers to a title that has no legal defects.

Title Insurance – The Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.

Title Search – A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property.

TRID-TILA-RESPA Integrated Disclosure Rule – This rule is designed to help improve consumer clarity and promote industry compliance regarding initial and final disclosures, loan estimates, and closing disclosure.