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Build a Plan of Action and Get Ready Buying a home is likely to be the biggest personal investment you will ever make. If you approach the process in a controlled and organized way, you will be far more likely to getting the best home deal possible with the least amount of stress. It is important that you anticipate the steps required to successfully achieve your housing goal and to build a plan of action that gets you there.
Before you can build a plan of action, take the time to lay the groundwork for your decision-making process:
What is your comfortable price range?
First determine how much can you afford to pay for a home. If you haven't done so already, find a lender and get pre-approved. Pre-approval will let you know how much you can afford so that you can target homes in your price range. You will know exactly what you qualify for and at what rate, you know how large your monthly mortgage payments will be, and you know how much you will have for a down payment. With this information, we can sit down together determine the price range in which to best effectively target your home search.
How soon do you need to buy?
Next, think about the timing of your home purchase. Do you have an active lease? Do you currently own a home that you'll need to sell to buy a new one? Have there been any major life changes (i.e. death of a spouse, etc.) that might affect your timeline?
Where do you want to live?
Third, ask yourself where you want to live. Things to consider:
• convenience for all family members
• proximity to work, shops, schools, transportation, amenities
• crime statistics of neighborhood
• local transportation
• school report cards
• predominant types of homes in neighborhood, for example condos, town homes, co-ops, newly constructed homes etc.
If you can target a few neighborhoods or areas, I can easily provide you with a wealth of information, including local school report cards, neighborhood writeups, crime reports, names and numbers of local resources, utilities, and government, etc. Just ask!
What characteristics describe your dream home?
Think about the space you'd like to live in. How many bedrooms and bathrooms does it have? How much square footage? Lot size? Think about level: do you mind a garden (ground floor) unit, or do you prefer the top level? Perhaps you need an elevator for mobility reasons. Perhaps you prefer a style of home, or would exclude a certain style of home from your search. Together, we'll discuss your needs in terms of "Must Haves", "Would Likes", and "Definite Nots" to paint a vivid picture of just what it is you are looking for. A solid understanding of your thinking helps me immensely when I begin formulating searches and evaluating available homes against your criteria.
Understand Buyers' Share of Costs
Budgeting for closing costs isn't something people like to do at this point, but it's very important to have an expectation of what the costs will be before you even begin looking.
For example, in the City of Chicago, there is a substantial local transfer tax that is paid by the buyer ($7.50/$1000 of purchase price) that may actually affect the amount you have available for a down payment. In other areas, such as Evanston ($5/$1000), the transfer tax is paid by the seller. I will inform you of the local transfer tax customs as soon as we target the areas you are interested in.
In the local Chicago market area, buyers usually pay:
• Share of title expense
• Local Transfer Tax (depends on township)
• Contractor’s fee for inspection
• Service charges on mortgage
• Homeowners Insurance Premium
• Portion of month’s interest on mortgage
• Attorneys’ fee
Once we've targeted a home of interest, I will work up an itemized list of estimated expenses so you will know roughly what the cost of buying will be.
Once the basic groundwork has been laid, you will truly be ready to move forward into an active search for your new, dream home.
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