Preparing to Buy a Chicagoland Home: Seller-Paid Closing Costs

Preparing to Buy a Chicagoland Home:
Seller-Paid Closing Costs     Looking out my office window right now, you'd never know that Spring ... and Spring's busier Chicagoland housing market isn't that far off.  Yet, it's true ...

     Chicagoland First-time Home Buyers ... and anyone else hoping to buy during this upcoming Spring's warmer-weather market, should be making their plans NOW, while winter snow is still on the ground and temperatures are frigid. 

     So, if you're a hopeful Chicagoland First-Time Home Buyer (or anyone seeking Mortgage financing) what should you be considering or educating yourself about right now ... at the beginning point in your process?

     First of all, find yourself a knowledgeable, experienced Mortgage Lender to work with.  Not sure how to do that?   

     Here are a few suggestions:  

  1. Inquire with Real Estate Agents that transact in Chicago or the Chicagoland area in which you hope to live.  
  2. Check with Real Estate Attorneys, your friends or family members that have Closed on a Mortgage loan recently
  3. Talk to Insurance Agents or others that work in the local real estate industry.  
  4. Gather names and note those mentioned multiple times. 

     Don't skimp on the attention you give to this matter ...  

     Do your homework.  Find the right person for you.  (For more info, help, and guidance, click HERE.)

     Once you've found your Loan Officer, have a long talk with them about your finances and your Credit.  Get Pre-Approved to discover:
  •   What Home Buying options exist for you
  •   Your Credit Scores 
  •   Your Credit capabilities
  •   If elements of your Credit need polishing 
  •   The Price Range of home you can buy
  •   Establish a time frame for your upcoming purchase
     One of the most important topics you'll talk about with your Loan Officer will be regarding a Down Payment on your home purchase.  At this time in the year, I often hear from Borrowers that Income Tax Refunds will be a contributing source to their Down Payment funds.  

     For Buyers hoping to utilize Income Tax Refunds during their home purchase (or Agents working with those Buyers), it's critical to make sure that Income Tax Returns are filed as early as all supporting documentation (W-2's, etc.) is received.  

     Tax Returns should be filed electronically, as this expedites the depositing of Tax Refunds into Checking or Savings Accounts, not to mention, the time it takes a Lender to confirm your 2014 Filing with the IRS.

     It's important for Home Buyers to know ...  Income Tax Refunds ARE acceptable to Lending Underwriters when saving/accumulating assets to buy a home.  

     Since most loan programs require Down Payment funds to come from the Buyer, it's important to demonstrate Down Payment funds as verifiable money in accounts.  (Accounts can be Savings, Checking, Money Market, Mutual Funds, Bonds, Stocks, and Retirement.)
Keep in mind that the:
  • Minimum Down Payment on FHA Loans is 3.5% 
  • FHA requires a 3.5% Down Payment, but ALL or PART of that Down Payment can be a Gift
  • Minimum Down Payment on most Conventional Loans is 5% 
  • At this time, it remains totally acceptable for Sellers to pay Closing Costs.  

     In the case of Sales Prices under $100,000, it's typically necessary to get Seller-paid Closing Costs (due to regulations put in place as of January 10, 2014, per the Consumer Financial Protection Bureau (CFPB).  

     Certain Closing Costs ARE allowable when Seller-paid.  That simply allows your Loan Officer to cover the cost of traditional fees incurred in a Real Estate purchase at Closing time. 

     I've included a breakdown of the guidelines (as of this writing) on the maximum allowable Closing Costs that a Seller can pay.  These Costs are expressed as a percentage (%) of the Sales Price ...

     For Conventional Loans:
  • Fannie Mae -  3% if Owner-Occupied and (see Below) *
  • Freddie Mac - 3% (2.5%in some cases) if Owner-Occupied
  • Investment Property - 2% Cap
    * 3% if LTV/CLTV Ratio is Greater than 90%
       6% if LTV/CLTV is 75.01% - 90%
       9% if LTV/CLTV is 75% or Less              
     For FHA:
  • Up to 6%
     For VA:
  • Up to 4% 
Preparing to Buy a Chicagoland Home: Seller-Paid Closing Costs ...  As you can see, there's quite a list of things to talk over with your Loan Officer when you hope to buy a Chicagoland home.  It's normal to have lots of questions.  So, let's get started and get those questions answered.  

     Contact me now so together we can best prepare you to buy a home ...

     *  Hoping to Buy, Refinance, or Build a Home in Chicago or the greater Chicagoland area?  

     Contact me!  I'll put my 40 years of mortgage experience and expertise hard to work on your behalf.
     I'm easily found at:

Gene Mundt

Mortgage Originator  -  NMLS #216987  -  IL Lic. #031.0006220  -  WI License #216987

American Portfolio Mortgage Corp.

NMLS #175656

Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281

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           Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender

Gene Mundt, Mortgage Originator, an Originator with 40 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:  The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI.  

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