As you might know, most condo buildings and associations
are NOT approved for FHA financing. So, it can be challenging
to find condos in Chicago that will qualify for FHA
financing.

Of course, you can visit the HUD website to find out which
buildings are approved for FHA. But, the website does not
tell you which condos are currently on the market For Sale.

The biggest advantage of using FHA financing is that you only have
to put down 3 1/2 % of the purchase price for a down payment.
Most conventional programs require at least 10% down.
That is a big difference!

Also, it is usually easier to qualify for a FHA loan because
it has a lower credit score requirement than a conventional loan.
Most banks only require 620 to 640 credit scores for a FHA loan.
But, conventional loans usually require 680 or better.

And last, but not least, conventional loans have stricter rules
regarding debt ratios. So if you are like most Americans and
you have a car note, student loan, and credit card debt, you
will probably qualify for a larger loan if you go with FHA.

Shopping for a condo can be tricky. I have a lot of experience with
real estate sales. I would be happy to represent you as a buyer’s agent.
The cost to you is absolutely nothing!

So, if you are looking for a FHA Approved Condo, please Send me a note!
with your name and price range.

Until the next time,

Mark Killion
Kale Realty
542 W. Roosevelt Rd
Chicago, IL 60607

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Newport Condos - Kenwood Chicago

Financing a condo can be tricky.
Here are some important questions to ask the listing
broker BEFORE you submit an offer on a condo:

1. How many units in the building are rented out?
Most lenders require that at least 51% of the units be owner occupied.
So if there are a lot of rentals in the building, it will be hard to finance.

2. Are there rental restrictions?
Many associations are starting to restrict rentals. So if you are planning
on buying a condo as an investment property, be sure to check if rentals
are allowed in the building. If there are restrictions, you might be required
to complete an owner-occupant addendum which states that you intend to use
the property as your primary residence.

3. How much does the association have in reserves?
It is important that the association have adequate funds in reserve to
pay for future repairs. If the association is underfunded, lenders will
be hesitant to finance a condo there. Also, if the association is underfunded,
they are likely to hit you with a special assessment in the near future.

4. What special assessments have been mandated in the past five years?
Occasional special assessments are often unavoidable. But frequent special
assessments probably indicate that the property is being mismanaged, or the association is
underfunded.

5. Is the condo building in litigation?
If the association is facing a pending court case, or is currently in litigation,
start looking for another condo to buy.

6. Are more than 10% of the units owned by a single entity?
If several units are owned by the same person, the lender will view this as
being risky. For instance, if a developer hits hard times, multiple units can
go into foreclosure simultaneously. The property value of the remaining condos
in the building will probably decrease significantly as a result.

7) Have there been any recent sales in this building? And did they involve financing?
If a condo has been sold in the last 6 months, and it was financed,
then you are probably in good shape. If all the recent transactions were
cash deals, then this might indicate that the building didn’t qualify
for financing.

8) Do you have FHA financing?
Most condos and condo buildings will not qualify for FHA financing.
I estimate that for every 100 condos on the market, only 5 of them will
qualify for FHA financing.
So if you are shopping for a condo, you should line up conventional financing
instead of FHA financing.

Conventional financing will require higher credit scores and a higher down payment.
Most lenders would like you to have at least a 680 credit score and a 10%
down payment to go with it.

9) How many units are behind on their assessments?
If several owners are behind on their assessments, this could be a red flag.
If the owners are not paying their assessments, they are probably in financial
distress. It will only be a matter of time before they stop paying their
mortgage. If several owners are behind on their assessments, most lenders will
not finance a condo in the building.

10) How many short-sales and foreclosures are on the market in this building?
If there are other condos in this building on the market, are they distressed sales?
If so, it could mean trouble. Lenders only want to finance condos in stable buildings.
If more than a couple of units are in some stage of foreclosure, then you should probably
find a condo somewhere else.

As you can see, financing a condo can be tricky. It is now more important than ever
to work with an experienced real estate agent that understands the complexity of condo financing.
Otherwise, you may waste a lot of time viewing condos that won’t qualify for financing.

Until the next time,

Mark Killion
RE/MAX Premier Properties
1205 N Dearborn
Chicago, IL 60610

Send me a note!

Visit me online: www.773property.com

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The Chicago Tribune published an article today on
the topic of closing costs. According to a recent study,
closing costs average $3,500 in Illinois. This would be
for purchases which required financing. For cash transactions,
closings costs dropped down to about $2,000.

So keep this in mind when you are getting ready to submit
an offer to purchase real estate. If you are using financing,
you will have to bring about an extra $3,500 to the closing table.
This is in addition to your down payment!

I would suggest asking the seller to contribute 3% towards
your closing costs. This will help reduce your “out of pocket”
expenses. When I say “ask the seller”, I mean have your
Realtor write that in the contract. It doesn’t hurt to ask.
Many buyers don’t have enough cash saved up to cover
a down payment AND closing costs.

Be sure to ask your lender how much they will allow the
seller to give back at closing to cover your costs. Some
programs allow up to 6% back. But be careful, the more
you ask for, the less likely the seller is to accept your offer.
The seller is looking at their bottom line. They might feel
that giving back 6% is too much. I have had success with
asking for 3% back for some of my previous valued clients.

If you are submitting a cash offer, I probably wouldn’t ask
for any closing cost credits. Just subtract $2,000 from the
amount you are willing to spend on the property. The result
would be your maximum purchase offer amount.

Closing costs can cover fees like:

Title Search Fees
Title Insurance
Appraisal Fees
Attorney Fees
Survey
Termite Inspection
Home Inspection Fees
Wire Transfer Fees
Loan Origination Fees
Loan Points
Loan Application Fees
Property Insurance
Notary Fees
Document Preparation Fees
Transfer Tax Stamps
etc.

Each title company and lender have their own specific fees
that they charge. So, your actual closing costs will vary.
But just keep the average costs in mind and you should be OK.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

However, you can often find a handful of condos on the market
that are actually in FHA approved buildings.

If you are looking for a FHA approved condo, please send me a note
to mark@markkillion.com

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

1. Define your needs.

Congratulations on your decision to purchase a new home! It is important to
select a professional real estate agent to work with you before you begin
house hunting, so that your agent can help you define what kind of home
and neighborhood would best suit your desires and needs. The finer the
details on your wish list, the more effective your home search will be.
To further define your needs, you may want to divide your lists into negotiable
and non-negotiable items, so your agent can operate with some flexibility when
scouting for homes on your behalf.

2. Get pre-approved.

Now that you know what you want in a home and neighborhood, you need to
find out what you can afford. The best way to do this is to get prequalification
or preapproval for a home loan. Your real estate agent can refer you to a
mortgage broker to begin the process. In most markets, preapproved buyers are
preferred by sellers over those who are prequalified. Your preapproved status lets
the seller know:

* You have gone through an extensive financial background check.
* A lender is willing to do business with you.
* The likelihood of unexpected obstacles regarding financing is minimal.

3. Let the house hunting begin!

Now you are ready to embark on your home search — an endeavor that can prove
overwhelming if not approached with some forethought. The most efficient route is
to allow your real estate agent to do the initial scouting for you. Using your wish list
as a guide, he or she will alert you of new and existing listings that have strong
potential. If these listings pique your interest, your agent will arrange home tours at
your convenience. Many agents send alerts via email — sometimes as often as daily,
depending on the available inventory in your market. Let your agent know how you’d
like to receive these alerts, whether by phone, email or fax.

You also can do some research on your own. Read local real estate publications,
contact your local neighborhood associations, visit the local chamber of commerce,
surf the Internet, or drive around your favorite neighborhoods. While these methods
certainly can lead to your dream home, it’s important to note that 82 percent of home
sales are the result of agent connections.* That means it’s more likely your agent will
find your dream home through being in the real estate business than you driving around
on the weekends.

* National Association of REALTORS®

4. Make an offer.

When you’re ready to make an offer on a home, your real estate agent will help you
determine the offer price by reviewing recent sales of homes similar in size, quality and
amenities. With your input, your agent will draft a written contract that outlines what
needs to be done by both parties to execute the transaction. If the seller accepts the
offer, the document becomes a binding agreement, so it is imperative that you carefully
review it with your agent and speak up if anything is not clear to you. It’s important to
note that if the seller changes any aspect of the offer, it is not a binding agreement
until the buyer agrees to the seller’s changes.

5. Strike a deal.

Sometimes, you get lucky and the seller accepts your offer as is. However, in most
instances, the seller will make a counteroffer. This is where your real estate agent’s
experience in negotiations will be invaluable. Keep in mind almost everything is
negotiable when you are buying a house. This can give you a great deal of leverage
in the buying process — that is, if you have adequate information and you use it in
an appropriate manner.

Some items you may negotiate:

* Price
* Financing
* Closing costs
* Move-in date
* Repairs
* Appliances and fixtures
* Landscaping
* Painting

Remain in close contact with your real estate agent so you can quickly review any changes
from the seller. Remember: Bargaining is not a winner-take-all deal. It is a business process
that involves compromise and mutual respect.

6. Prepare for the closing.

When an offer becomes a binding agreement, your real estate agent will help you tackle the
checklist of action items that you, as the buyer, have agreed to perform prior to closing.
Depending on how the responsibilities are divvied up in the agreement, this is typically when
you will:

* Conduct a home inspection.
* Get an appraisal and finalize your financing.
* Secure title insurance.
* Shop for a home warranty.

Having these procedures done in a timely and professional manner is a must, as any delays
could threaten a successful closing. A first-rate real estate agent should be able to serve as
your “one-stop shopping??? referral source for service providers. Your agent also should serve
as your advocate, helping to coordinate activities and making sure the vendors have access
to the property to perform their jobs.

7. Close the deal.

Congratulations! The moment you’ve been anticipating has arrived. The closing is
where home ownership is legally transferred from the seller to the buyer. It is a
formal meeting that most parties involved in the transaction will attend. Closing
procedures usually are held at the title company’s or lawyer’s office. The closing
officer will coordinate all the document signing and the collection and disbursement
of funds.

In advance of your closing date (24 hours at minimum), your lender will send a final
closing statement that outlines your closing costs, if applicable. Your real estate agent
will review this document with you to ensure its accuracy, as well as help you gather
any necessary documentation that you’ll need to bring to closing.

If you would like more information on buying Chicago Real Estate,
please send me an e-mail.
You can also visit me online at www.773property.com

I am a licensed REALTOR that specializes in Chicago Real Estate.
Although I service all areas of Chicago, I work mostly on the South side.
My office is near the Bronzeville and Hyde Park neighborhoods.
My services include, but are not limited to, the following:

* Helping Owners Avoid Foreclosure
* Helping First Time Home buyers realize their dream
* Helping Sellers find qualified buyers
* Helping tenants lease luxury condo rentals

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Here is a list of some of the FHA requirements for condo financing:

1) The legal documents of the homeowners association do not contain a
right of first refusal or restrictive covenant. (This one kills most deals,
because the “right of first refusal” is very common in Chicago condo declarations)

2) There are no special assessments pending.

3) No single entity owns more than 10 percent of the total units in the project.

4) The common areas have been under the control of the homeowners association
for at least one year.

5) At least 51 percent of the total units in the project are owner-occupied.

6) There are no adverse environmental factors affecting the project as a whole or
individual units.

7) At least 90 percent of the total units in the project have been sold.

8 The units in the project are owned in fee simple or the units are held under a
leasehold acceptable to FHA.

9) The owners association has adequate common area insurance coverage.

10) General maintenance level of common elements is acceptable and there is no
deferred maintenance, based on the comments by the Appraiser and/or the pictures.

11) The owners association has a reserve plan and a reserve fund, separate from the
operating account that is adequate to prevent deferred maintenance.

12) No legal action is pending against the condominium association, or its officers or
directors.

13) For projects consisting of 30 units or less, no more than 20 percent of the total
units are encumbered by FHA insured mortgages.

As you can see, this list is quite extensive. If you need FHA financing, you may
want to search for Single Family Homes or 2-4 Unit Buildings. I wish FHA financing
was easier to obtain for condo purchases. However, there are a handful of condos
that have FHA approval!

If you would like a list of FHA approved Chicago condos,
please send me an e-mail. You can also visit me online at www.773property.com

I am a licensed REALTOR that specializes in Chicago Real Estate.
Although I service all areas of Chicago, I work mostly on the South side.
My office is near the Bronzeville and Hyde Park neighborhoods.
My services include, but are not limited to, the following:

* Helping Owners Avoid Foreclosure
* Helping First Time Home buyers realize their dream
* Helping Sellers find qualified buyers
* Helping tenants lease luxury condo rentals

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Thank goodness for the FHA program.   

This government program was put in place to help EVERYONE realize the
American Dream. FHA loans are NOT driven by credit score.  So even if
you have “bad credit”,you can still obtain financing!  Generally speaking,
if you have a 600 credit score, 3 1/2% down payment, and moderate
income, you can qualify for financing.  However, all collections must be
paid in full. Of course, your income will need to support your loan amount.   

Here’s the rule of thumb I use:  Multiply your annual gross* household
income by 2.5  *Gross means ‘before taxes and deductions’ This is roughly
how much mortgage you can afford. Don’t include overtime or bonuses in
your income amount.  Most lenders will not count anything except guaranteed
income. Also, you can’t count part-time jobs, self-employment income, or
commissions unless you have two years of W2/1099 statements to back it up.  

For example, let’s say you and your spouse (or significant other) make a com-
bined 80K per year.   If you multiply 80K times 2.5, you will come up with $200K.   
This means you should  be able to afford a home worth $200K.    If you have a
lot of debt, this number will be less.  If you don’t have much debt, this number
will be higher.   If you don’t have a 600 credit score, start working on your credit now!  

Boost Your Credit Score

Pull your credit report at www.myfico.com   Get the product which includes your FICO
scores from all 3 credit bureaus. Your middle score is the one that will be used.  This
is not the same as your average score. Example:  lets say you have a 557 Experian;
a 668 TransUnion; and a 574 Experian score. The 574 score would be your middle
score, because it is not the lowest score, and it is also not the highest score.   It is
the ‘in between’ or middle score.

You can dispute any inaccurate information online. To qualify for a loan, you will need
to pay off any collections.   Next pay down your credit card balances. Your credit card
balances should be no more than 30% of your credit limits.   After you do this, your 
credit should greatly improve within a few months.  Also, the 3 1/2% down payment can
be a gift from an immediate family member.   If you don’t have any savings, this might be
a good time to hit up mom and dad   

You might also be able to borrow the down payment from your 401K.  You may be able
to  borrow up to $10,000 from your retirement plan, for a down payment, without getting
hit with a penalty.  Ask your plan administrator for more details.     

The downside to the FHA program, is that it generally only works for Single Family homes,
or 2 to 4 unit buildings.   Condos generally don’t qualify for FHA insured financing
See my next post on getting a condo approved for FHA financing.

So, in summary, you don’t need perfect credit to get financed.  However, you will need
to have a 600 middle credit score, 3% down payment and a verifiable income.   If you
have that, I can help get you financed! Then I can help you find the property of your dreams.

If you would like more information on Chicago Real Estate,
please send me an e-mail. You can also visit me online at www.773property.com

I am a licensed REALTOR that specializes in Chicago Real Estate.
Although I service all areas of Chicago, I work mostly on the South side.
My office is near the Bronzeville and Hyde Park neighborhoods.
My services include, but are not limited to, the following:

* Helping Owners Avoid Foreclosure
* Helping First Time Home buyers realize their dream
* Helping Sellers find qualified buyers
* Helping tenants lease luxury condo rentals

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY