Archive for the 'Chicago Real Estate News' Category
April 16th, 2014 categories: Chicago Real Estate News
You might not need to wait quite as long to buy another home after losing one to a foreclosure or selling one in a short sale, thanks to a new program from the Federal Housing Administration.
REALTOR® Magazine recently covered the FHA’s Back to Work Program, which allows buyers to purchase a primary home much sooner after they’ve suffered through a foreclosure or short sale.
Traditionally, home buyers would have to wait 36 months after losing a home to foreclosure or selling a residence through a short sale before they could qualify again for an FHA mortgage loan to buy a primary residence.
The wait for conventional mortgage financing — a loan not insured by a government agency — is even longer after a foreclosure or short sale. Buyers in such situations typically have to wait several years to qualify for a conventional mortgage loan.
The Back to Work Program, though, allows buyers to qualify for an FHA-insured mortgage loan as soon as 12 months after losing a home to foreclosure or closing a short sale.
To qualify for the program, which ends Sept. 30, 2016, buyers must provide lenders documents that explain why they had to resort to a short sale or why they fell into foreclosure. As the REALTOR® Magazine story says, buyers might have to produce documents that show a 20% loss in income for at least 6 consecutive months before losing their homes to foreclosure.
Buyers will also have to prove to lenders that they have taken steps to repair their income streams and credit. This usually means that buyers must have a FICO credit score of at least 640. Buyers might be able to qualify for the program after having undergone an HUD-approved counseling program on the financial responsibilities of owning a home.
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April 14th, 2014 categories: Chicago Real Estate News
If you’re like many Chicago residents, you’re ready to start looking for a home, whether your dream is to live in a single family home in Lincoln Square or a condo in Ravenswood.
But one thing could keep you from finding your ideal Chicago residence this spring: a weak credit score.
Lenders today pay close attention to your three-digit credit score. And why not? Your credit score illustrates whether you have a history of paying your bills on time each month or whether you instead miss payments or make your payments late.
If you fall into the latter category, your credit score will be low. In general, mortgage lenders today consider a FICO credit score of 740 or higher to be excellent. If your credit score is lower than 640, you might struggle to qualify for a loan from any lender in the Chicago area.
Fortunately, if your credit score is weak, you can boost it. A recent story by the real estate Web site RealtyTimes takes a close look at some of the steps you can take to boost your credit score.
Most of the advice is common sense. If you want your credit score to rise, pay your monthly bills on time each month. Nothing will cause your score to fall faster than forgetting to make a car payment or paying your credit-card bill 20 days late. If you start a new history of paying your bills on time, your credit score will gradually, but steadily, rise.
Next, pay off as much of your credit-card debt as possible. Lenders view large amounts of credit-card debt as a warning sign: If you are burdened with too much Discover-card or Visa-card debt each month, you might struggle to make your mortgage payment each month. The more credit-card debt you can eliminate the higher your credit score will climb.
Of course, neither of these solutions are quick fixes. And if your credit score is low – say, near 620 or lower – it will take time to increase that score, often a year or more. This means that you might have to wait to purchase a home. If you don’t, you’ll either fail to qualify for a mortgage or your lender will saddle you with a sky-high interest rate to cover the risk of lending to you.
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April 11th, 2014 categories: Chicago Real Estate News
Don’t be surprised if home sales in Chicago and across the country continue to slow a bit in the coming months, even with the hot spring selling season on the way.
The National Association of REALTORS® recently reported that pending home sales declined for the eighth straight month in February.
Pending home sales is a forward-looking indicator based on contract signings. This means that when the pending home sales index dips — as it did in February — future home sales will fall, too.
This shouldn’t be viewed as a negative. Home sales across the country and in Chicago were on the rise for a long time, as buyers jumped into the market following the end of the housing crisis. Home sales were so strong for so long, a slight slowdown shouldn’t come as a surprise to anyone.
This doesn’t mean, either, that you won’t be able to sell your Chicago condominium or single-family home this spring or summer. Chicago is still a strong residential real estate market, especially in the most desirable of city neighborhoods, places like Lincoln Park, Lakeview and Lincoln Square. Buyers still want to live in the city. They’ll still be buying condos and single-family homes as warmer weather finally makes its way to the Chicago market.
There is a key, though, to closing a Chicago home sale this year. And it’s the same key as every year: You need to set the right sales price for your condo or single-family home. If you try to set a price higher than your market will bear, buyers won’t make serious offers. Buyers are smart today. They’ll simply move on to the next home that’s priced right.
If you’re serious about selling your Chicago home this spring or summer, then, you’d do well to work with a licensed REALTOR® who knows your neighborhood. This professional can help you set the right price, one that’s not so high that it will chase away potential buyers and not so low that you’ll be leaving profits on the table.
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April 9th, 2014 categories: Chicago Real Estate News
Houses can be beautiful things. I should know; I’ve been selling them for years, and some of the stunning residences in Chicago still surprise me.
But there are times when homes can be strange things. Especially when they sit all by themselves in the middle of an empty block.
Chicago Magazine recently took a look at what the publication calls the five loneliest houses on Chicago’s South and West Sides. What the magazine uncovered are some truly eerie homes standing alone in some of Chicago’s depopulated areas.
Photographer David Schalliol’s Isolated Buildings Studies highlight these solitary homes. They’re the result of the pre-housing-slump days, when developers cleared wide swaths of Chicago land for big housing developments.
But when the housing market faltered in 2007 and 2008, many of these big projects came to a halt, often after just one or two homes were built. That has left odd pockets of the city where one home stands in an otherwise empty series of lots.
As Chicago Magazine reports, the city’s residential housing market has recovered steadily from the housing crisis. However, not all areas of the city have enjoyed the same steady recovery. Sure, North Side neighborhoods such as Lincoln Park, Lincoln Square and Lakeview are thriving today. But many parts of the city’s South and West sides remain largely depopulated.
Of course, Chicago is far from the only city that has seen lonely houses. Many far-flung suburban communities, for instance, saw developers descend on them to build new subdivisions. But when the economy collapsed, these developers left, leaving scores of nearly empty subdivisions behind. These are eerie sights, too, whenever you drive past them on the highway.
The question now is whether we’ve all learned our lessons. Will we overbuild again once the economy picks up enough strength? Or will developers exercise caution, to make sure that lonely houses and subdivisions don’t keep popping up across the country.
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April 7th, 2014 categories: Chicago Real Estate News
I’ve written often about the benefits of the mortgage interest deduction for homeowners. And I’ve written, too, about how the tax benefits of owning a home are under steady attack these days from members of Congress.
If you need more proof of this threat, a recent column by national real estate writer Kenneth Harney provides it.
Harney’s column sums up the proposal of Michigan Rep. Dave Camp to reform the country’s tax code. A big chunk of Camp’s proposal deals with the tax deductions now available to homeowners. To sum up, Camp’s proposed legislation would reduce or eliminate these deductions.
And that’s too bad: Tax breaks are a big benefit to owning a home. Anything that diminishes that benefit could diminish the incentive to purchase a home. That’s not good for the country. When people own homes, they care more about their neighborhoods because they’ve made significant investments in them. They attend more community meetings and spend more time interacting with and getting to know their neighbors.
The good news, as Harney writes, is that Camp’s proposal has no real chance at passing this year. But Harney adds that the concepts Harney introduces will probably resurface. And some of these changes have a real chance of one day becoming law.
Here are some proposed changes, as covered by Harney: Camp proposes lower federal income tax brackets and higher standard-deduction levels — Camp proposes a standard deduction of $22,000 for married joint filers and $11,000 for single filers. In exchange for this, Congress would approve big changes to the mortgage interest deduction. Currently, all mortgage amounts of $1 million or less qualify for interest deductions. That limit would fall to $500,000 in four years under Camp’s plan.
Another change? Interest write-offs on home equity loans would not be allowed unless homeowners were using the money to improve their homes. Camp’s proposals would also end deductions for property taxes, end tax credits for owners who make energy improvements to their homes and eliminate the penalty-free withdrawals that people can make from their IRAs to purchase a first home.
Again, these changes won’t happen any time soon. But don’t be surprised to see them resurface in the coming years. One thing is almost certain: There will be some changes to the tax benefits of homeownership.
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