Buying a new home can be very exciting. But it can also be more than a little intimidating owing to many steps and variables involved. To help you understand and be more comfortable with the process, here are the top 10 Chicago home buyer questions answered.
1. What credit score do I need?
Of all the Chicago home buyer questions, this is probably the most frequently asked. Financial experts recommend a minimum credit score of 620. A higher score, however, 700 or above, will get you better lending terms.
2. How much down payment will I need?
Typically, down payments run about 3% to 5% of the purchase price.
3. Are there special programs to help?
Yes, if you meet certain requirements, special programs are available to help you secure lower-cost financing and get lower down payments. These programs include FHA loans, USDA loans, and VA loans. Properties in rural areas are often eligible for USDA loans, and with these, no down payment is required.
4. What are the costs beyond the down payment?
This is one of the Chicago home buyer questions that is seldom asked but should be. While the down payment is usually the largest cost, there are several other costs and fees. For example, most lenders charge 2% to 4% of the loan amount in origination fees.
5. What does a realtor actually do?
A realtor can be a valuable asset in the home buying process because she can explain and walk you through every one of the complex and confusing steps. Your agent can also help you understand the jargon-laden forms and contracts. A good agent is your ally throughout the whole thing.
6. Can I simultaneously buy a home and sell my current one?
This is one of the Chicago home buyer questions that, if asked at all, is usually asked too late. But, yes, you can buy a home and sell your current one at the same time. You just need to be aware that it’s a lot like walking a financial tightrope.
7. Do I really need an inspection?
Short answer: yes, you definitely do need an inspection – unless, of course, you want to wait till you’ve already bought the house to discover enormously costly problems. An inspection will discover problems and issues that you can address during the negotiations process.
8. How long does it take to close?
Closing typically takes a minimum of 30 to 45 days, but it can take much, much longer. There are so many contributing factors and variables involved that it’s difficult to provide a concrete answer.
9. Can I back out if I change my mind?
Again, this is another of the Chicago home buyer questions that should be asked but often isn’t. You can back out, but the cost and ramifications depend on certain factors. If you back out without a good reason, you’ll probably forfeit your earnest money deposit, which is usually about 1% to 2% of the purchase price. So you need to make sure all agreements and contracts have contingency clauses in place. Then if something isn’t up to snuff, you can back out without cost.
10. When do I get the keys?
If everything goes right, you will get the keys to your new home at closing. In certain instances, however, the lender will still need to fund the loan, so you won’t get the keys till that happens.
Hopefully, you’ll find these Chicago home buyer questions answered to be helpful. For knowing the answers can, in fact, save you a significant amount of money and help prevent life-impacting purchasing mistakes.