Conventional – Waiting Period after Bankruptcy

FHA – Waiting Period after Bankruptcy

VA – Financing Waiting Period after Bankruptcy

I like to give credit when credit is due…
This great information was provided to me by:
Robert OBoyle
Branch Manager
13011 S 104th Ave Ste 204
Palos Park, IL 60464
Office: (708) 827-8001
Email: Robert.OBoyle@AcademyMortgage.com

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

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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

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Visit me online: www.773property.com

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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

In many areas of the city, the number of properties
sold is trending up while the selling price is
trending down. So demand is being driven by
increased affordability and the tax credit.

Also, investors are back in the market snatching up
deeply discounted bank owned properties. The
distressed property sales are pulling down Chicago’s
median value. There are properties on the South
and West Sides selling for $20,000! But, I think
that certain areas, like the South Loop and the Near
North side, are stabilizing. Sales activity in those areas
is high, but there is also a lot of inventory on the market.

Hopefully, when the tax credit expires, consumer
confidence will be higher than it is currently. The
timing is good, because it expires during the busy
Spring selling season. So right when it expires,
seasonal demand will be picking up.

I think we hit bottom around July/August 2009.
There is a lot of pent-up demand out there. But there
is even more uncertainty. The main concern now is
job creation. But, I think overall that 2010 will be a better
year than 2009.

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

Unless you’ve been under a rock, I’m sure you’re aware that the
housing market is going through a tough time. The theme for most
media channels is ‘doom and gloom’. And while I must admit that
the current market isn’t great, we have to keep in mind that
that Real Estate is a very local business. Comparing the
Chicago market to the California market is definitely an
‘apples to oranges’ comparison.

Also, Chicago is so big, that it isn’t really fair to compare
neighborhoods either. Some neighborhoods still have a very strong
demand for housing (i.e. Loop,Near North), whereas other areas have
less of a demand. In comparison to other areas of the country,
Chicago is doing better in the midst of this “real estate slump???.

However, I must admit that the number of transactions are
probably down 25% vs. 2007. But, homes are still being bought and
sold every day in Chicago. If you’re planning on buying a home, that
you will live in for the next 3 to 5 years, then you don’t have anything to worry about.

Some buyers may be on the sidelines waiting to see if the prices
will drop. It is next to impossible to realize when you’re at the
bottom of any economic cycle. They don’t even know when we’re
in a recession, until two quarters later! Hindsight is 20/20.
Also, what about mortgage rates?! Due to this crazy inflation,
mark my words, mortgage rates will start climbing. So while you’re
waiting to see if we’re at the bottom of the Real Estate cycle,
the mortgage rates will climb, and you’ll miss your window of
opportunity. It is an excellent time to buy right now!

Unfortunately, we are still in a credit crunch. The lenders have
much tighter guidelines, and it is much harder to obtain financing.
Conventional programs want a high credit score, a good down payment,
and a good (verifiable) income. Most people have 2 out of 3 (and if
you’re one of my friends, you probably have 1 . So now is a good
time to pull your credit (www.myfico.com), and try to improve it.

You definitely want to pay off any collections. Also, the quickest
way to make your score jump is to pay down credit card balances!
If your credit is on the low side, don’t despair. You may still be
able to get a loan via the FHA program.

The FHA program is making a strong comeback in popularity.
The best part about FHA is that it isn’t driven by credit score.
If you have a 580 FICO middle score, and a decent verifiable income,
you should be able to obtain financing. However, you will need a 3%
down payment.

The days of “no money down??? loans are history (with the exception of
the VA guaranteed loans). But, the 3% FHA down payment can be a gift
from a family member, government program, or certain non-profit
organizations. FHA also allows the seller to pay your closing costs.
Congress is about to pass legislation barring the seller from funneling
the 3% down payment to a buyer via a third-party organization though.

Apparently, these types of deals have a much higher rate of foreclosure.
The biggest down side to the FHA programs, is that they generally
don’t approve condos. You will have a much easier time financing a
single-family home. Townhomes, and ‘2 to 4′ unit buildings should
be OK too. FHA also has a stricter appraisal process, and the seller
may be required to make certain repairs before closing. This may not
be feasible if you’re dealing with a REO (bank owned property).

FHA insured loans are the savior for this rough lending market.
FHA loans also allow a slightly higher Debt-To-Income Ratio. More on
Debt-To-Income Ratios later….

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