The Elbowroom is dedicated to giving you current information on buying your first home.  Questions? Just reply and we’ll give you our best.  Or, just reply so we know someone’s reading this ;).  This is what we have this month:

Answer to the Question:

How about some True / False?:

The best deals out there are short sales and foreclosures – False There are sellers out there with equity in their homes that need to sell.  Also, some of the best deals we’ve seen in the past 11 years have been estate sales.

In Illinois, most of the appliances stay with the property when it sells – True, for the most part.  Just make sure you ask for them in your contract.  Some folks are taking their fancy washer and dryer, but a wise man once said, ‘everything is negotiable.’

I have to have 20% down in order to buy a home these days – False. About 25% of our past clients have put down 20%.  You can put down as little as 5% with a conventional loan and FHA still allows 3.5% down, but we tell everyone that we like to see a cushion for emergencies.  If $10,000 is what you have to your name, and your down payment will total $8,000, wait a year and save money.

Another scenario we’ve seen lately are those that are right on the verge of putting 20% in order to avoid PMI (Private Mortgage Insurance).  Thus they are looking to buy a home with a much lower purchase price than they can afford.  This is GREAT, as long as you like the homes in that price range, but lately we’re seeing people battle this scenario.  Meaning, the homes aren’t making them excited.  With the exception of an FHA loan, please note that PMI is not forever.  If you end up having to put 15% down, you can elect (most of the time, please ask your lender) to drop your PMI after you’ve paid down your mortgage balance to 78% of your original purchase price.  So if you put 15% down (85% of the purchase price), you have 7% to go until you send a letter to your lender and say, ‘I’m at 78% Mr. Wells Fargo guy, take my PMI off.’  How much is PMI?  Completely depends on your credit, purchase price, and a few other factors but the average is $100 – $200 a month.

I can write off my mortgage interest and real estate taxes against my income – True. Learn this scenario, it’s very important.  Some of you are going to save a few hundred dollars a month (see below).

If I’m going to get an FHA or VA loan, then I can’t buy a condo – False The association, building, or subdivision has to be FHA or VA approved.

I have to pay, out of my pocket, for my real estate agent and mortgage lender – False, with some exceptions.  The loan officer is paid by the bank, although you will pay some lender fees at closing (should be about $1,000, including your appraisal).  If you utilize a buyer’s real estate agent and you purchase a home listed in the MLS, your real estate agent that represents you is paid by the listing agent’s real estate broker, which is paid to them by the seller.  So again, as a first time buyer, the fee for your agent is included in the price of the home if you buy a home that is listed by another real estate agent and it’s listed in the MLS.  SOME buyer’s agents have agreements with different terms (most don’t).  When you sell, it’s your turn to pay both agent’s fees if you utilize a real estate agent to sell your home.

And a question…..

If I put a contract in on a short sale, do I have to wait the whole 60 – 200 days or so for the bank to come back to me with their response?  Answer – No. You can negotiate this upfront or have your attorney write in to their ‘attorney review letter’ that the buyers will stay in the contract for 60 days, and at the end of those 60 days, the buyer will notify the seller and the seller’s bank if they will continue to wait for an answer.  You basically want to see if there’s progress being made on the deal, or not.  If there’s not, you can elect to cancel the contract and find something else.  But again, you must have this clause in writing before the attorney review period ends.

 

Mortgage Rates Drop as Stock Market Slips

The volatility in the stock market is affecting mortgage interest rates, nudging them lower. According to Freddie Mac, the average interest rate for a 30-year fixed-rate mortgage was 3.65% for the week ending February 11.

Despite an uptick in the benchmark lending rate by the Federal Reserve in December 2015, consumer mortgage rates have been slowly falling for the past several weeks. This recent drop puts us within sight of 2015’s low point, when 30-year fixed-rate mortgages hit 3.59%.

The actual mortgage rate you qualify for will depend on your credit worthiness and type of mortgage. Overall, we remain in a mortgage rate environment that is beneficial to first-time home buyers! If you haven’t already been pre-approved for your mortgage, now’s the time!

Kitchens Matter When Choosing Your Chicago Home

Even if you’re not a gourmet cook, you’ll want make sure the kitchen in your new home contains enough space and features to accommodate your needs. The quality of your kitchen will also affect your home’s future value and marketability! Here’s what to look for:

  1. Layout: the stove, fridge, and kitchen sink should have a triangle layout – meaning that you could connect them by drawing an invisible triangle. There should have an open path from the fridge to the stove, and from the stove to the sink, ect.
  2. Kitchen sink: The sink is usually by a window for a couple of reasons. One, for natural light; and two, so you don’t bonk your head on a cupboard! Some homes have sinks facing an open wall instead of a window. This is ok, but it won’t give you natural light when working in the sink. Look for adequate counter space around the sink area.
  3. Electrical outlets: Outlets should be easy to access, and there should be enough of them to cover your everyday small appliances: coffee maker, microwave, toaster, crock-pot, and the like. GFI outlets are a plus.
  4. Light: Ideally, a kitchen should have an east-facing window for morning sunshine. No matter where the windows are placed, there should be ample natural light.
  5. Space and storage: Buying a home with a good kitchen enhances livability and convenience. Make sure the countertops offer enough space for meal prep. There should be enough cupboards for dishes, mugs, glasses, pots and pans, and the small appliances you’ll start collecting as a homeowner. (Everyone needs a panini grill and a cake-pop maker, right?)

The Four ‘Majors’ when Looking at a Home

We talk a lot about the four majors with our first time home buyer clients: roof, windows, foundation, mechanicals.  These are usually NOT the items that first time buyers are looking at when they see their first few homes, but we point them out.  First time home buyers are emotional, they are looking at entertaining space and ‘man caves’, but our responsibility is to point out the aspects of the home that’s going to cost you money both in the short and long term.  Of course, there are many aspects of a home to consider when purchasing one, but we try to keep it simple and once they understand these components of the home, we can talk about other issues.

1. The roof, in our opinion, is usually the most important.  As agents, it was easier 10 years ago when 30 year singles were becoming more common.  These shingles are easy to spot so a recent replacement was obvious, but that’s not the case anymore.  But we’re looking for curling shingles, or shingles that are severely worn down.  This is an indication that a replacement is needed sooner than later.

2. Windows.  The main key with windows is whether they are dual pane or single pane.  Unlike roofs, this is an easier observation.  Single pane windows are older, and usually have storm windows.  Very inefficient, and is gets worse over time.  A regular sized window replacement with a vinyl dual pane window is around $450 a piece.  Add it adds up so it can be a large expense.  Patio sliders are around $2,000, same category.

3. Foundation.  Expertise on foundations are way out of an agent’s league, but we’re looking for cracks or water stains anywhere in the basements.  Obviously finished basements make that hard, but there’s always some storage / mechanical room that tells us some of the story at least.  We like to discuss sump pump / drainage tiles at this point as well.

4. Mechanicals.  Furnace, water heater, air conditioner, kitchen appliances.  Manufacture dates are sometimes easy to find, most are little difficult.  We point these items out, and how long they are supposed to last pus general cost estimates for replacement.  If something looks really old, it’s not hard to point out.  Whether a furnace is 5 – 10 years old is not so easy, so we’re looking for the obvious relics.  Water heaters have the manufacture dates right on the front label so they make it easy on us.

Remember, we are not experts and you will have a home inspection.  Just keep an eye out for these items.

Turbo Tax

Once a year we post this calculator that shows how much of a tax break you will receive when you purchase a home. The federal government allows you to deduct mortgage interest and real estate taxes off of you income.  This is so important to know, and even when we explain it at our seminars, most are still confused.

The easier way to learn is to interact, so please take a few moments to play with this calculator and you’ll notice how much the federal government will allow you to deduct.  It could save you $100 a month, it could save you $500 a month.

Click here for FAQ’s on deducting the mortgage interest / real estate taxes.

Here is their tax caster calculator that gives you the option to enter an anticipated mortgage interest and real estate taxes expense.

Awesome Customer

When my fiancé and I decided to buy a house, we were pretty clueless, but help was on the way! After attending one of StartingPoint Realty’s Home Buying Seminars, we started our home buying journey with the greatest guide we could have ever hoped for…Ryan Gable!!!! There aren’t enough good things that we can say about Ryan. He is amazingly personable, has an unrivaled knowledge of Real Estate and will do anything in his power to ensure his client’s satisfaction. He has this uncanny ability to relay complicated information to you in an easy to understand way. Since we were first time home buyers, that ability was welcomed with open arms (and ears)! Not to mention, Ryan pays very keen attention to the listing as you walk through it, and does not hold back if something does not sit well with him. From our very first step, to the closing on our new home, Ryan was there (He literally WAS there…He sat next to us through the entire closing). We can only hope that more people get to work with Ryan and StartingPoint Realty. Thank you, Ryan, for being you, and for putting the “Real” back in “Realtor”!

– Mike and Maribel

First Time Home Buyer Seminars

Our seminars are free and there are absolutely no sales pitches made at these sessions.  That’s a guarantee.  We do need an accurate headcount so please click here to RSVP.  Thank you.

Upcoming Classes:

Chicago:

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Downers Grove:

Elk Grove:

Movie Review

Theatrical Poster Under The Fair Use Act 

Creed

I’m hoping most of you have read other reviews of this movie before reading this one. Reason being is that if you read only mine, you might just think I’m a huge Rocky fan pleading you to see this movie. If you take 5 minutes, you’ll see this is a highly rated movie – 94% on Rotten Tomatoes. There’s a reason for this; it’s a great movie. If you’re like me, you saw Rocky V and gave up. That movie was terrible and it became clear some folks were cashing out on a once great movie franchise. In 2006, Rocky Balboa was released and I had no desire to see it. Although the reviews weren’t bad.

So when the trailers for this movie came out, the rolls of the eyes occurred worldwide. Dumb idea. But I remember over the summer reading a review in the Chicago Tribune for Creed, three and half stars (out of four). I don’t remember exactly what was written, but the writer was basically saying, ’I know this should have been bad, but it was really good.’ He was right.

In Rocky iV, Rocky Balboa’s nemesis turned friend Apollo Creed died in the ring fighting a Russian fighter.  Adonis Johnson (Michael B. Jordan) is Apollo Creed’s son.  He’s had some hard times as a child, but along the way he finds out his true bloodline.  He also discovers boxing and realizes he has some talent, but he needs some training.  He needs a mentor. So he packs his bags and heads to Philadelphia to find Rocky Balboa (Sylvester Stallone).  There’s not much to find however.  Balboa is running his small restaurant in Philly, living by himself, and any past boxing glory are now framed pictures in his restaurant.

Adonis meets Rocky and cuts to the chase.  He wants to be a boxer and he wants Rocky to train him.  ‘No thanks’, says Rocky and you know he means it.  Stallone makes it clear that Rocky is an old man and his lust for life is on the down slope.  But Rocky was tight with Apollo Creed, and Adonis knows this.  Adonis pulls on this a bit, and Rocky eventually caves in.  But in the past movies, Rocky / Stallone was always getting back into game to prove his testosterone level. That or his ego, or both.  But not here. This was a relief for me because I couldn’t watch Stallone take Rocky through another grinder of ‘I can take my shirt off and still impress you’.  We actually get the opposite.

Are there some fights?  Does Adonis win one or two? Are there training sequences?  Is there a love interest?  It does all add up to the boxing movie formula, but the key is the writing, the direction, and the acting.  Jordan is great and Tessa Thompson who played his love interest Bianca is phenomenal.  But the movie belongs to director / writer Ryan Coogler and Slyvester Stallone.  Coogler is a young man, but this movie was written with intelligence and compassion.  Instead of the boxing flash and macho struts of fighting movies before Creed, Coogler handles the fighting part as secondary.  Balboa says to Adonis that the battle with yourself will be the biggest battle of your life.  Coogler stays with that theme and it works.  As stated before, this movie was heavily bet as a disaster.  But instead, he made into great movie.  He also did Fruivale Station, which I haven’t seen, but everyone says it’s a winner as well.  It’s on my list.

Awhile back I saw the movie ‘Copland’.  That is a GREAT movie, and another character driven movie.  Stallone was in Copland as the cop trying to do good in a situation where he’s surrounded by bad cops.  He was noticed as a fine actor in that movie as well, but the Rambos and Expendables will always overshadow that small movie.  In Creed, I was in awe at the trust Coogler put into Stallone.  There were a few crucial scenes where a bad performance by Stallone would have killed the whole movie.  Instead, he shined in these parts.  That’s why some were talking about a Golden Globe or even Oscar for Stallone’s role.  Stallone wrote the original Rocky script and part of the package he was offering to the major studios was that he had to play Rocky Balboa’s role.  He got offered a lot of money for the script ($350,000 vs. $106 in his bank), but no one wanted him to act the role.  United Artists gave him a raw deal on the acting gig, cut the budget in half, and some of the producers had to mortgage their homes to complete the movie.  That story along with a few Rocky movies themselves show you what heart and perseverance can equate to.  When told right, these stories work.  It’s not about talent, it’s about your will (or lack there of).  Creed is a good one, see it.

Hi, do you have any questions that I can answer for you?