HOMEOWNERSHIP TIPS
In honor of June Homeownership month in Illinois, we posted daily tips. For your benefit, we have consolidated the list here.
The home buying process might seem complicated or unmanageable. But knowing all the key parts to buying a home will help you plan for challenges and avoid mistakes.
We hope these tips increase your knowledge and help guide you with buying a home!
HOMEOWNERSHIP TIP #1
Attend homebuyer counseling.
• You can find good information on
buying a home from trusted
websites, family and friends, but
nothing is better than speaking with
an expert. Attending a homebuyer
counseling course will help you
understand the complexities of
buying a home, and will prepare you
for the responsibilities of
homeownership. Classes are free.
• Find a HUD approved Housing
Counselling Agency here.
HOMEOWNERSHIP TIP #2
Know what you can afford.
• There are several factors that
lenders take into consideration
when determining how much they
will lend to you for your home
purchase. The three most
important factors are you income,
debts and down payment.
• Learn more ways to increase your
purchasing power here.
HOMEOWNERSHIP TIP #3
Don’t buy if you can’t stay put.
• If you can’t commit to remaining in
one place for at least a few years,
then owning is probably not for you,
at least not yet. With the
transaction costs of buying and
selling a home, you may end up
losing money if you sell any sooner
– even in a rising market. When
prices are falling, it’s an even worse
proposition.
HOMEOWNERSHIP TIP #4
Shoring up your credit.
• Since you most likely will need to get
a mortgage to buy a house, you
must make sure your credit history
is as clean as possible. A few
months before you start house
hunting, get copies of your credit
report. Make sure the facts are
correct, and fix any problems you
discover.
• Obtain a copy of your credit report
by visiting
www.annualcreditreport.com or one
of the three credit bureaus
HOMEOWNERSHIP TIP #5
Aim for a home you can really afford.
• The rule of thumb is that you can
buy housing that runs about two-
and-one-half times your annual
salary. But you’ll do better to use
one of many calculators available
online to get a better handle on how
your income, debts, and expenses
affect what you can afford.
HOMEOWNERSHIP TIP #6
Can't put down 20%? You may still qualify for a loan.
• It’s important to know that putting down
20% is not a requirement to qualify for a
loan. There are a variety of public and
private lenders who, if you qualify, offer
low-interest mortgages that require a
small down payment.
• In fact, with IHDA loans, a borrower can
secure up to 105% financing if
structured correctly for certain lending
situations. In essence, the borrower can
purchase a home for 1% total
investment. For example, a buyer can
purchase a $200,000 home for as little
as $2,000 total cash investment.
• The IHDA network of qualified lenders
can help you with your particular
situation.
HOMEOWNERSHIP TIP #7
Buy in a district with good schools.
• In most areas, this advice applies
even if you don't have school-age
children.
• Reason - when it comes time to sell,
you'll learn that strong school
districts are a top priority for many
home buyers, thus helping to boost
property values
HOMEOWNERSHIP TIP #8
Get professional help.
• Even though the Internet gives
buyers unprecedented access to
home listings, most new buyers
(and many more experienced ones)
are better off using a professional
agent. Look for an exclusive buyer
agent, if possible, who will have your
interests at heart and can help you
with strategies during the bidding
process.
• Don’t wait – start now! You can find
an Illinois Realtor here.
• When you’re ready to secure a loan,
be sure to work with an IHDA
approved lender.
HOMEOWNERSHIP TIP #9
Choose carefully between points and rate.
• When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.
• When looking at rates, be sure to look at Welcome Home Illinois first. Welcome Home Illinois offers a below market interest rate for a 30-year fixed-rate mortgage. So when you’re ready to secure a loan, be sure to work with an IHDA approved lender.
HOMEOWNERSHIP TIP #10
Before house hunting, get pre-approved.
• Getting pre-approved will you save
yourself the grief of looking at
houses you can't afford and put you
in a better position to make a
serious offer when you do find the
right house.
• Not to be confused with pre-
qualification, which is based on a
cursory review of your finances, pre-
approval from a lender is based on
your actual income, debt and credit
history.
HOMEOWNERSHIP TIP #11
Use an IHDA approved lender for your home loan.
• IHDA finances the creation and
preservation of affordable housing
throughout the State of Illinois to
increase the supply of decent and
safe places for people of low or
moderate means to live. Let our
network of qualified lenders guide
you through the quick and easy
process of getting a home loan.
• In this video, see how easy the IHDA
loan process can be and how we
helped a family achieve the dream
of homeownership by purchasing
their first home.
HOMEOWNERSHIP TIP #12
Work with an expert--get homeownership counseling.
• Want advice on buying a home,
renting, default, foreclosure
avoidance, credit issues or reverse
mortgages? HUD sponsors housing
counseling agencies throughout the
country to provide free or low cost
advice. Housing counselors can
help you with home purchases AND
provide foreclosure prevention
counseling.
• In this video, see how foreclosure
prevention counseling helped a
family secure temporary financial
assistance in order to keep their
home.
HOMEOWNERSHIP TIP #13
Do your homework before bidding.
• Your opening bid should be based
on the sales trend of similar homes
in the neighborhood. So before
making it, consider sales of similar
homes in the last three months. If
homes have recently sold at 5
percent less than the asking price,
you should make a bid that's about
eight to 10 percent lower than what
the seller is asking. An Illinois
Realtor can help you gauge sales
trends and help prepare you to
make an educated bid.
HOMEOWNERSHIP TIP #14
Understand the down payment.
• The down payment is the initial
payment made when buying a
home. The amount of your down
payment will impact your ability to
get a mortgage as well as the loan’s
interest rate and terms.
• Remember, putting down 20
percent is not a requirement to
qualify for a loan.
HOMEOWNERSHIP TIP #15
Find the right property for you.
• Once you’ve determined your price
range, it’s time to start looking at
houses. Do you have ideas about
what you want in your new home?
Get that list on paper. Consider the
home’s interior (number of
bedrooms or bathrooms, type of
kitchen), amenities (yard, extra
playroom, storage space) and size,
as well as location and lifestyle,
commuting distance and
community, schools and services.
Whatever you put on the list should
be a reflection of you.
HOMEOWNERSHIP TIP #16
Be sure to get a home inspection.
• What is the value of a home
inspection? Though not required by
law, a satisfactory home inspection
(which will help you understand if
there are any hidden problems) is
an important part of successfully
buying the right home. The
inspection examines the condition
of the property and identifies
necessary repairs and potential
problems before you buy the home.
The inspection generally costs a few
hundred dollars, and is paid for by
the buyer.
HOMEOWNERSHIP TIP #17
Making an offer on a home.
• You’ve found a home that meets
your wants, needs and budget. It’s
time to make an offer. The offer is a
legally binding commitment sating
that you will buy the property for an
agreed-upon price provided certain
terms and conditions are met. An
accepted offer to purchase real
estate must be in writing and signed
by both parties.
• You don’t need to prepare the offer
alone. If you are working with a
Realtor or an attorney, they can help
you with this process.
HOMEOWNERSHIP TIP #18
Finalize your mortgage loan application.
• After the purchase agreement is
sent to your lender, they will finish
processing your loan application
and have the property appraised to
make sure it is worth the amount
you want to pay for it. Your lender
will help you through this process.
• Our IHDA network of qualified
lenders will guide you through the
loan application process from start
to finish.
HOMEOWNERSHIP TIP #19
Close on your home loan.
• Closing is a meeting to sign paperwork
and transfer title of the home from the
seller to you. To ensure your closing goes
smoothly, be sure to ask questions. A
week before closing, talk to the people
who are representing you, like your
Realtor and your loan officer, and tell
them you'd like to spend a couple of
minutes to discuss what to expect.
• Try to review your loan documents in
advance. It is a helpful way to ensure all
is going as planned and you don’t
receive any surprises. You can ask your
lender that you want to review the
documents before closing, or ask your
attorney to do so.
HOMEOWNERSHIP TIP #20
Moving in! • You have the keys to your home. What now?
If you have access to your new place a day or
so before the moving van is scheduled to
arrive, take that time to get a few things done
while your home is still empty. Give it a deep
clean. Cleaning the floors, baseboards and
windows will never be this easy again - you'll
have unhindered access to everything. Think
about it - no curtains to take down, no rugs or
furniture to move. If possible, hire a cleaning
service to help you get it all done. Also, now is
a great time to make any stylistic changes like
putting a fresh coat of paint on the walls or
sanding/staining floors if you have hardwood.
• Once finished and everything has been moved
in - take a nap! Those boxes aren't going
anywhere. By getting an adequate amount
of sleep you'll be ready and able to get started
on whatever you need to do the next day.
HOMEOWNERSHIP TIPS
For more helpful tips on what you should know
before buying a home and to learn more about
Welcome Home Illinois home loan program, visit
the Homebuyer Education page on the
Welcome Home Illinois website.
While there be sure to sign up for our IHDA
newsletter to stay on top of all of our program
news.