When Am I Ready To Buy A Home?

1. I have a solid credit score 580+ but the higher the better!

2. I have my down payment saved up The down payment on the average home in Chicago is just under $10,000

3. I have a steady work history down payment assistance programs typically require at least 2 years work history

That You Must Know

Real Estate Vocabulary

Appraisal - An appraisal will be requested by the bank issuing you a mortgage loan to ensure that the home is worth what is being asked for. This cost is typically paid by the buyer and is based on the size of the home. Sometimes this is an out of pocket cost or can be rolled into your bank loan, however this varies by lender.

Closing Costs - Costs that are associated with closing costs include a home inspection, appraisal, taxes, etc. Typically closing costs are about 2-4 % of the home’s purchase price. Depending on the market and specific home, sellers may cover some of a buyer’s closing costs with seller’s credits.

Down Payment - A percent of the cost of the property that is paid at the closing table as a part of the mortgage. Most of the client‘s I work with put as little as 3.5% of the home‘s purchase price down on the home.

Earnest Money - An amount of money that a buyers pays upfront to demonstrate good faith and intention to complete the real estate transaction. This is typically paid 1-3 days within signing a contract and in most cases, about 1% of the home purchase price is recommended. Earnest money is money that goes towards your downpayment, and can typically be refunded if a contract is canceled within 5 days of the contract being signed.

Equity - The difference in market value of the home versus what is owed on the home. Typically, as a person pays off their mortgage, the equity they have in their home increases, as well as their net worth.

Pre-Approval - An estimated amount of the purchase price you qualify for. Getting Pre-Approved in 1 of the very first steps needed to complete when starting the home buying journey.

PITI - Your maximum allowed monthly payment for a home based on your income, assets, debts, etc.

P- Principal or sale price

I - Interest Rate (will vary)

T - Taxes charged on the property annually (changes annually)

I - Insurance | Homeowners Insurance is to protect your investment and Mortgage Insurance is required by the bank if you put down less than a 20% downpayment.

Mortgage - A borrower’s monthly payment to repay their home loan.

15 Steps to buying a home

There are many small details that go into each step which would have caused this guide to be 20+ pages but here are the key milestones you should know in the home buying journey.

Genuinely, the first step is to meet with your trusted realtor so that you can discuss all the small details hidden within the steps below but also to establish a free strategic plan to get you into your dream home as smoothly as possible. When you are ready to take that step, make sure to book an appointment with me through the "Let's talk real estate" tab above!

How much is a 3.5% down payment on a home?

$250,000..........................$8,750

$300,000........................$10,500

$350,000........................$12,250

$400,000........................$14,000

$450,000........................$15,750

$500,000........................$17,500

$550,000........................$19,250

$600,000........................$21,000

$650,000........................$22,750

$700,000........................$24,500

Don’t forget that closing costs are also roughly 2-4% of the home purchase price but depending on the property,

buyers may have the power to negotiate with sellers to provide sellers credits (funds) to pay for their downpayment and closing costs.

Buyers may also qualify for DOWNPAYMENT ASSISTANCE grants to pay for ALL of these costs AS WELL!

7 benefits to owning your own home

1. Opportunity to build home equity and your own personal net worth with each monthly mortgage payment

2. Homes appreciate in value every year at a nationally average rate of 7.7% since 2012 according to Credit Karma.

3. No surprise rental increases from your landlord or surprise evictions due to them selling the property.

4. Several property tax deductions are available to homeowners during tax season

5. As a homeowner you have the freedom to personalize the interior and exterior of the home at your own discretion

6. Opportunity to pass on generational wealth to future generations

7. Potential to bring in passive income each month if you are able to rent out a portion of the property.

Ready to take the next step towards homeownership?