Archive for the 'Mortgage Information' Category

Advantages to Owning a Chicago Condo

Wednesday, May 23rd, 2012

Are you penned up in a Second City apartment, biding your time until the housing market improves? Are you daydreaming of Chicago condos and waiting for the right moment to pounce on a unit of your own? Well, now may be as good a time as any to do just that.

There may be a list of reasons to stay put, but there’s an equal bounty of compelling reasons to invest in a condo now. After all, it’s still a buyer’s market.

As national rents climb steadily higher, condo prices remain at historic lows—but not for long. Chicagoans with steady jobs and reliable incomes possess a unique opportunity to take advantage of some great deals on the condo market. If the prospect of snatching up a great unit at a low price isn’t enough to get you going, here are a few more arguments that favor of condo owning over renting.

1. The satisfaction of ownership should never be underestimated. Apartment dwellers may have the luxury of flexibility, but the ultimate cost is freedom. Owning your own condo means complete control over the design and aesthetics of your space. When it comes to interior design, you have the freedom to shape how your condo looks and feels. You can renovate, redesign and repaint to your heart’s content, until the space you live in has become your ideal home.

2. When you rent an apartment, you send a monthly rent check to your landlord and never see it again. But when you own a condo, what you spend on the sale is theoretically paid back as the condo builds equity. The longer you live in your condo, pouring money and effort into it, the more equity it accrues.

3. As long as you have a fixed rate term on your condo mortgage, you can bask in the comfortable predictability of owning a condo. Fixed rate mortgages allow you to calculate the costs of owning your condo ahead of time, eliminating the threat of uncalculated risks or spontaneous disasters. Repair and renovation costs can be tallied up beforehand as well, as they are often as routine and predictable as mortgage payments.

4. How often do Chicago apartment dwellers really connect with their next-door neighbors? Living in a neighborhood of people who own their condos provides a sense of community often not available in rental apartments. Condo owners are likely to stay put longer, allowing you opportunity to build relationships with them. Plus, knowing who lives near you means living in a safer environment.

And that’s just for starters. There are countless reasons why investing in a condo now is a smart decision. Remember that it may take some time before the housing market recovers completely and, if you wait until it does, you may be missing out on an opportunity to establish a stable life in your own condo, building equity and establishing yourself in a friendly community.

Should you graduate to a house or a condo?

Monday, April 30th, 2012

There are a growing number of college graduates who, in their search to build quick and solid equity, are torn between buying a house or buying a condo. Condos tend to be more conveniently (or should we say more attractively) located amongst lively urban settings, but they’re not without drawbacks. Here are a few things to keep in mind while weighing your options.

Whatever you do, don’t get hung up on a condominium’s “cool” factor. Yes, they’re cool. And yes, they’re popular with young professionals. But “cool” almost always costs extra.

That said, consider this: when you purchase a home, you want something that will appreciate, maybe not quickly, but at least steadily. Condos are currently appreciating at slower and more sporadic rates than traditional single-family homes. You may think that staying put long enough makes this a negligible point, but in fact, that’s not the case.

Because of their recently inconsistent performance in the market, condos are a challenge when it comes to getting a loan–a process that’s even more complicated if you require a mortgage backed by the Federal Housing Administration (FHA). If you want to finance a condo, the FHA will require that 50% of the units in your building be owned or under contract. Plus, if more than 15% of the units are 30 days or more past due on payments, you may not be approved.

Of course, if you can find an FHA-approved condo building, you’ll probably have an easier go of it.

What about houses, then? Well, aside from the fact that single-family homes offer things like a yard and creative freedom in any remodeling, they generally require a slightly lower down payment (10 to 20% versus 20 to 25% for most condos). The flip side to all of that is being solely responsible for upkeep, both indoors and out, although that also means you’re not paying a condo association dues every month.

At the end of the day, there are pros and cons for both–as it is with just about everything in life requiring a “one or the other” selection. Remember that first and foremost, you need to be content with your surroundings, both the neighborhood and the neighbors (overall, anyway). So as you’re visiting potential properties, pay keen attention to who and what’s around and ask whether you could be comfortable there.

How to Raise the Value of Your Chicago Condo

Monday, April 23rd, 2012

In the midst of an unpredictable (though undeniably recovering) real estate market, one thing is for certain: it’s a buyer’s world. Affordability rates are at record highs, mortgage rates at record lows and, as more owners begin to place their properties on the market after years of waiting for improved conditions, inventory is more plentiful than ever.

This doesn’t mean that homeowners hoping to sell in the near future are without options. In fact, because so few new homes are being built, contractors have become increasingly eager to find work, meaning the costs of home renovations are lower than ever. And while condo owners ready to sell now may find it difficult to hold off placing their unit on the market, it may prove exceedingly advantageous to invest in some improvements first, thereby boosting the eventual price of their unit and allowing them to wait until selling conditions are restored.

According to Remodeling magazine, home improvement costs have decreased dramatically over the course of the past three years, dropping by 6.9 Percent in 2009, 2.3 Percent in 2010, and roughly 2 Percent last year. It comes as no surprise, then, that in the fourth quarter of 2011 the National Association of Home Builders reported that its members saw remodeling activity reach its highest point in the past five years.

Far from having no control over the selling price of their home, Chicago condo owners have the opportunity to improve their chances of fetching a higher price for their unit by investing in interior improvements. While waiting for the real estate market to shift in favor of sellers, owners should think critically about what upgrades would drastically improve the quality of their condos. But keep the focus on improvements that will draw in potential buyers.

This means opting for a renovation that will make your condo appear move-in ready, rather than glamorous upgrades that may actually scare away budget-conscious buyers. Beautiful, updated kitchens and baths will surely attract buyers, but it’s not necessary to go overboard with unnecessary architectural flourishes and granite countertops.

Most important is simply to ensure that your condo meets the standards of similar units in your neighborhood. If your unit is either outdated or too flashy, it will stick out like a sore thumb amongst other nearby condos. You may want to consult a real estate agent, builder or housing expert to make sure you’re investing money in the right places, and not just throwing it out the window.

Mortgage Modification Program – Proposed Changes

Friday, February 17th, 2012

The Home Affordable Modification Program (HAMP) has some proposed changes that would make the mortgage modifications obtainable for owners of rental properties. The Obama administration stated last week that it would broaden the eligibility for consumers for mortgage modifications. The program will now be open to owners of rental properties and homeowners who carry the burden of medical bills, credit card debt and second mortgages.

The expansion allows investors to seek mortgage loan modifications for rental properties, regardless if it is occupied or if it is vacant with the owner’s intent to rent it. Before this proposed change, only owner-occupants were eligible for these loan modifications. Government officials stated that they decided to go this route because the number of foreclosed rental properties was unfavorable for low and moderate-income renters.

According to a January article in the Chicago Tribune, U.S. Treasury Assistant Secretary Tim Massad stated that HAMP was created to attempt to prevent foreclosures. “We’re expanding it to investor-owned properties for the same reason. If your neighbor is foreclosed on, whether they’re an owner or a tenant, that affects you and all your neighbors. We’re allowing them to get modifications. They still have to prove a hardship and go through a protocol that proves this is a good use of taxpayer money,” Massad said.

Loan modifications are eligible for approximately 700,000 national rental properties. This is good news for Chicago apartment owners. “These small, multi-family buildings make up a big part of the housing stock in Chicago so any effort to stabilize them would be helpful. But one of the reasons that HAMP didn’t target rentals was at some level these are businesspeople and why would you want to incentive them for taking too much risk on an investment, “ says Geoff Smith of DePaul University’s Institute for Housing Studies.

Borrowers who have large medical, credit card or second lien payments are faring well from HAMP as well. Those who were previously ineligible due to debt-to-income ratio on their first mortgages being below 31% can now begin to be evaluated for the program. HAMP was originally scheduled to expire in December 2012 but has now been extended to December 31, 2013, with no additional costs to taxpayers. HAMP will be funded from $29 billion that has been set aside for the mortgage modification endeavors.

Holiday Cheer for Chicago Condo and Home Owners Facing Foreclosure

Wednesday, January 18th, 2012

Owners of Chicago real estate (and homeowners nationwide) who are struggling with making their mortgage payments received a holiday gift this year from Fannie Mae and Freddie Mac, along with other lending giants. The lenders pledged not to foreclose on delinquent buyers during the holiday season.

According to a December article in CNN Money, condo and homeowners who have loans with Fannie Mae and Freddie Mac could rest easy that they would not be evicted between December 19th, 2011 and January 2nd, 2012. The good will measure does not end legal and administrative proceedings for evictions, only allowed families to stay in their homes for the full extent of the holidays. Executive VP for Fannie Mae Terry Edwards explained, “No family should have to give up their home during this holiday season.”

Additionally, Chase pledged not to evict any of its struggling borrowers from December 22nd, 2011 through January 2nd, 2012. Wells Fargo also postponed evictions during this time. However, the bank said evictions would not be dissolved completely where foreclosure-related actions may need to be taken for loans it services through separate lenders. In a similar vein, Bank of America stated they would “avoid foreclosure sales and displacement of homeowners or tenants around the Thanksgiving and Christmas holidays” on loans they own, according to the CNN story. Still, like Wells Fargo, the organization said it would proceed with certain foreclosures on loans it services if the loan owners were so inclined.

A monthly average of 89,000 foreclosure auctions were scheduled in 2011, according to information from RealtyTrac as reported by CNN Money. Eviction is the next course of action after foreclosure auctions. This holiday suspension of foreclosures is said to have aided tens of thousands of people who own homes, condos and other residential properties throughout the country. It is expected that, in at least a few of these cases, the extra time gave delinquent homeowners the extension they needed to come up with the back money owed on their mortgage, allowing them to keep their home in 2012.

Bill for Payroll Tax Cut Extension Footed by Homeowners

Monday, January 16th, 2012

Recently, legislation was passed that allows for a two-month extension of a payroll tax cut and long-term unemployment benefits that were set to expire January 1st, 2012. Those buying or refinancing homes this year will be the ones paying for the payroll tax cut. Someone who buys a $200,000 home or refinances that amount after January 1st, 2012 will now have to pay an approximated additional $17 a month on their mortgage.

The payroll tax cut is currently working its way through congress—the bill was passed in Senate mid-December, 2011 and the House was supposed to act on the bill during the last few days of December. The increases in fees are proposed to gradually phase in.

Due to the state of the housing market and large amount of foreclosures in recent years, private insurers have contended with Fannie Mae and Freddie Mac, who are backed by the federal government. As it stands, Fannie Mae, Freddie Mac and the Federal Housing Authority (FHA) subsidize roughly 9 out of 10 new mortgages. In order to handle the $33 billion dollars the government owes, the payroll tax cut in turn raised the fee for government-subsidized mortgages through Fannie Mae and Freddie Mac in order to insure these mortgages.

The rise in fees also applies to anyone with a mortgage subsidized by the FHA, which includes many first-time and low-income homebuyers. President Obama’s administration felt raising the mortgage guaranty fees Fannie Mae currently charges could restrict Freddie Mac’s domination in the mortgage market.

How To Deal with Early Mortgage Payoff Penalty of Your Chicago Condo

Thursday, December 8th, 2011

Early payoff is something many owners of Chicago homes wish for, however it may come at a price. When you go to close on your Chicago condo purchase, make sure to read the fine print closely because some real estate purchasers will find there is a penalty fee for paying off that mortgage before the scheduled term is up.
According to a December article in the Chicago Tribune, buyers can save themselves from receiving such a big penalty by reading their loan information carefully or getting creative… One Chicago Tribune reader that had an opportunity to pay off his loan in full got around being docked a big penalty by giving the lender a check for the full amount of the mortgage minus $5. What good does that do, you ask? The mortgage penalty fee was determined by a percentage of the payoff amount. Therefore, if the buyer only has $5 left to pay off, the fee is greatly reduced (even a 100% penalty would only be five bucks).

Prepayment penalty is not uncommon but does not exist on all loans. Still, not all purchasers of Chicago homes realize it could be a contingency of their mortgage. Especially new buyers, who are coming onto the market in increasing numbers.

Loan fees and penalties are included in the promissory note and buyers of Chicago condos can find out if they have the penalty by reading the information there. Also, if there are any legal issues with making partial payments and then lowering the penalty as noted above, it will be listed here as well.

For all issues regarding Chicago properties, including probate matters, real estate attorneys can be extremely important to consult. Illinois-specific real estate laws and customs exist and knowing what they are is helpful to having a smooth transaction and payment plan. For example, an heir can sell his/her parent’s house with an affidavit of heirship. Illinois title companies demand a bond in lieu of probate of 2% of the sales price. This is only if the home is sold within one year of the owner’s death or 1% if the home is sold after 1-2 years of the owner’s death. If the house is sold any other time after two years, the affidavit of heirship is the only thing needed and there is no longer a bond. The Illinois Real Estate Lawyers Association (www.irela.org) has a lawyer locater tool for clients wishing to contact a lawyer in the state to help with all issues regarding Chicago real estate.

New Chicago Mortgage Assistance Program

Thursday, September 15th, 2011

September 14, 2011 – If you are one of the many Chicago homeowners having a hard time making your mortgage payments, you may be eligible for a new federaly funded mortgage assistance program. If you qualify, you could get a loan for as much as $25,000 to help make your payments and may not have to repay the government. According to a report in the Tribune, the new program aimed at helping financially distressed Chicago real estate owners will be announced today.

There are 18 states plus Washington D.C. that received funds for this mortgage assistance program. They were selected by having the highest unemployment rates and having over a 20% drop in home values. Bank of America, JP Morgan Chase and Wells Fargo have all agreed to the program.

Owners of Chicago condos and single-family homes who haven’t qualified for any other Chicago mortgage assistance may be able to tap into the $345 million available in this “Hardest Hit” program. Homeowners have to have had their yearly income reduced by a minimum of 25%, their income must be equal to or below 120% of the local median income, have a fixed or adjustable rate loan and the balance on that loan can’t be over $500,000.

If you have already been hit with a foreclosure and the process is nearly over, you may be turned down. Also, second mortgages are not eligible.

According to the article, if you meet all of the qualifications for the Hardest Hit program then you won’t have to repay the loan amount that you are granted. Otherwise payments are structured over a 10 year period.

You have to make monthly payments just like any other loan. The fund requires that those payments be 31% of your gross income, including unemployment benefits. The fund will pay the entire monthly mortgage payment for as long as 18 months or up to $25,000, whichever comes first. If you run out of unemployment benefits and have no other income, the fund will make the whole monthly payments for you. But if you do have an income and miss two payments you will be bumped from the program.

If you sell your home at a profit within the first 5 years of being in the program you have to repay the loan. If you sell in the second five years of the program, then part of the loan will be forgiven, according to the article.

As you can see, there are a lot of “ifs” in this program. To date, about 5,200 homeowners have applied for assistance. Of those, 74% have gotten past the first qualifications. The article states that 915 applicants have gotten to underwriting, and of those there have been 95 turned down, 24 approved and 150 still being negotiated. So far $605,000 has been granted.

The only place to apply is at IllinoisHardestHit.org, so if you aren’t already affected by Chicago foreclosures but are struggling to make your mortgage payments you may want to see if you qualify.

[tags]Chicago Mortgage Assistance, Chicago Foreclosures, Chicago Real Estate[/tags]

Refunds On The Way For Many Countrywide Borrowers

Thursday, July 21st, 2011

July 21, 2011 – If you’re one of the many homeowners affected by Chicago foreclosures and your lender was Countrywide, you may have a refund coming your way. A recent announcement by the Federal Trade Comission stated that Countrywide Home Loans is accused of overcharging at least 450,000 homeowners who were facing foreclosure or who had defaulted on their loans.

At first the estimate was about 200,000 homeowners who were due a refund. Bank of America took over Countrywide in mid 2008 and B of A agreed to pay around $108 million in a settlement with the FTC. That money will be used to pay all of the refunds.

Countrywide allegedly charged homeowners too much for property inspections and title reports as well as other fees related to defaults on loans. The FTC report also stated that Countrywide even inflated the amount still owed on mortgages before homeowners went into bankruptcy. The FTC statement says the refund checks being sent out range from $500 to $7,000.

These refund checks won’t have any big impact on Chicago real estate as a whole, but it does remind homeowners to be very aware of all fees charged to their mortgages and exactly how much is really owed on your loan.

[tags]Countrywide Home Loans, Chicago Foreclosures, Chicago Real Estate[/tags]

Trump Tower A Good Bet For Chicago Casino

Tuesday, July 12th, 2011

July 12, 2011 – A lot of investors might call the Chicago real estate market a gamble right now, but even more betting could come to Chicago if Governor Quinn signs the the new bill that was recently passed by the Illinois House and Senate. If passed, the bill would allow for five new casinos and expanded racetrack gambling in Illinois. And one site being considered for the proposed new Chicago casino is Trump Tower. The other site being considered is McCormick Place.

We won’t know if Gov. Quinn gives a green light to the bill until sometime in October when it’s expected to reach his desk, according to the Tribune. But if he does sign and not veto, Trump Tower could reel in a huge attraction that could potentially boost hotel occupancy quite a bit.

If you aren’t in the market to buy one of the Chicago condos at Trump Tower you can still have the Trump experience by renting one of the hotel suits. There are some specials being offered for the summer and those are listed below.

Multi-Night Stay Special Offer
Guests get 20% on a two night stay and 30% off rates for a three or more night stay.

City Breaks
This package will get you a continental breakfast for two and a nightly hotel credit of $15.

Kids in the City
This one night stay package deal includes a stay in one of the Delux King View Suites, a $15 hotel credit, milk and cookies at night, continental breakfast for two, a Trump Kids welcome gift when you check in, donation to the Godnight Foundation in your name and your choice of Playstation, Xbox, Wii or other game in your room.

Pets Welcome
With this package you get to bring your pet with you. You also get a $15 hotel credit, gift for your pet, daily continental breakfast for two and a donation to the Goodnight Foundation in your pet’s name.

And if after your hotel stay you decide you’d like to buy a condo at Trump, you can find more information about those units and other luxury Chicago condos by following the link.

[tags]Trump Tower, Luxury Chicago Condos, Chicago Real Estate[/tags]