Living in Lincoln Park Blog

Well, it is official.  Home values are getting better.  According to the S&P/Case-Shiller 20-city index, home prices moved up 0.6% year-over-year, with nine of the 20 cities in the index showing gains.  Much of this was likely fueled by the Home buyer’s Tax Credit, but psychology is a major variable in any recovery.  If you believe, as many economists do, that people are generally driven by fear and greed then there is a good chance that this recovery could continue as the greed to get the best deal on a property is replaced by the fear of lost opportunities of getting a good deal.

Chicago fared fairly well in the report.  While our metro area is still showing decreasing prices at -3.0%, it was far from the bottom of the barrel.  Additionally, historical data shows that areas hardest hit by a contraction usually emerge the soonest.  Among the top performing cities where coastal cities, which had reached unsustainable values before the crash.  The good news for current shoppers is that this is the canary in the coal mine.  It gives them a unique advantage of knowing that increases could be around the corner in our market and that good deals are still to be had.

Now that home prices on the move, are you ready to  get pre-approved for your new home? Or are you just interested in exploring the Chicago real estate market? Either way, let me know, I’m here to help!

Just because you’ve found some interesting Chicago homes for sale doesn’t mean your house hunt is up. There’s much more to do before signing those closing papers, and one of the biggest is having the home inspected. In fact, getting a home inspection will probably be drilled into you by your real estate agent. Yes, it’s that important.

What can you find out from a home inspection report?

Although many people do get a home inspection, just as many have a difficult time deciphering the reports to find out what’s serious and what isn’t. To make it worse, inspections vary from state to state. Fortunately, the American Society of Home Inspectors, who has a list of inspectors all around the United States, has a specific set of guidelines.

General Inspection

Inspector licensure varies by state, but in Illinois, they must be licensed. The general home inspection covers such things as:

• Structure – how well the walls, ceiling, foundation and more are put together
• Exterior evaluation – landscaping, elevation, drainage, windows
• Plumbing – Checks the condition of piping and identifies the materials used
• Roof and attic – framing, flashing, gutters, ventilation
• Systems – water heaters, duct work, air conditioning, chimney, furnaces, sprinklers
• Garage – Slab, firewall, garage door
• Appliances – including smoke detectors
• Electrical – main panel, types of wiring, grounding, circuit breakers, light fixtures and more

The inspection reports will state whether the Chicago homes for sale have serious health and safety issues, bad or old roofs, systems malfunctions, foundation problems, and moisture and drainage problems. If there are major issues found from your inspection, you have the opportunity to address them with the seller and perhaps negotiate for the repair costs.

 Special Inspection

Some things require a specific license for inspection, lead paint and mold, to name a few. Although you may not want to spend the extra money, these things can cause the “sick house syndrome” (people getting sick a lot for no recognizable reason). These problems should not be ignored: 

• Asbestos
• Radon
• Formaldehyde
• Mold, mildew and fungi
• Rodents
• Lead
• Methane
• Radiation

Some issues aren’t big and can be dealt with fairly easily. Other things, however, are expensive fixes and usually deal breakers. Before you sign closing papers on one of the Chicago homes for sale, get that inspection done to find out what you’re really getting.

If you’re looking for a healthy home in good condition, I can help. Email me at Doug@LincolnParkLiving.com for more information.

Your Lincoln Park loan is in underwriting.  This term often strikes fear and confusion into the hearts of borrowers and REALTORS®.   Multiple manifestations can come to mind. Some envision a great and powerful wizard, the Oz of lending, who shapes an arcane process where the future of a buyer’s dreams face a whimsical decision. Others see in their mind’s eye a sadistic torturer who devises endless lists of seemingly Herculean stipulations to make the process seem impossible. In reality, it is just a person like you and I doing their job.

Underwriting is simply matching up a borrower’s financial situation with the specific guidelines or requirements of a particular loan program.  The aim of this process is, in fact, very simple.  It is almost like working down a checklist.  The execution of the process can be anything but simple. 

To begin with, there is not a single set of guidelines.  The risk management groups of the banks who issue the loans create guidelines for each individual program.   These guidelines are very specific requirements and they define what degree of creditworthiness is acceptable for the level of risk for the loans.  They usually number from 20 – 40 specific requirements and each requirement must be met for the loan to be approved.

To add to the complexity, each client file is different.  I have been in the business since 2002 and have yet to feel that I have seen the same deal twice.  Granted there are similarities in the assets, employment or credit rating of individuals, but each client is the sum of their individual parts.  When aggregated, these variables create an infinite number of combinations that must, in turn, be mapped onto the aforementioned program guidelines.

This process of matching up the borrower to the guidelines is not speculative or subjective in nature.  On the contrary, it is purely objective.  An email or verbal verification of a particular aspect of the client is not good enough.  Only cold, hard factual data allows the underwriter to objectively decide.  Each document is meticulously reviewed to ensure that nothing positive or negative is missed.  The greater the amount and detail of the documentation, the greater the understanding the underwriter has about the client and the better he or she can match the borrower to the program.

The next time you find yourself rubbing your temples in frustration, take a moment to appreciate the process.  Take solace in the fact that underwriting is a purely logical process that actually protects your ability to access the credit that you are entitled and that the underwriter is taking the time and effort to fully evaluate you as a borrower.  Granted, getting a loan can sometimes feel like a particularly invasive visit to a doctor, but can you think of a better way to ensure that the privilege of home ownership goes only those who deserve it? So when you’re looking to buy your next Lincoln Park home, be sure to be patient with the lending process and to trust the advice and council of your lender and your real estate agent

So, I was playing Chutes and Ladders with my son the other day and it occurred to me that this analogy might help prospective buyers currently looking to buy a home in Chicago understand the mortgage rate market.  So here goes.  For those not familiar, Chutes and Ladders is a kid’s game where you simply try to get to the end of the game board by moving your game piece based on the spin of a wheel.  The chutes and ladders referred to in the name are arrayed about the game board and, as you land on certain points, you either move ahead or fall back.  As I bounced back and forth on the board, I realized that I am watching a colossal game of Chutes and Ladders everyday in the mortgage marketplace as rates swing back and forth based upon economic data.

Home buyers move ahead by getting their documents to the lender and meeting their requirements for a loan approval and hoping for a good rate.  Then bang, unemployment drops and consumer confidence rises.  The buyer hits a chute on their rate game board and are now looking at a higher rate than originally expected, but they keep chugging along.  Then boom, housing data shows weak sales and Greece nears default on their debt and rates plunge.  The same buyer is now looking at lower rates.  Eventually, they, like the players in the children’s game will happily reach the end and rejoice in their purchase, but throughout the journey they will face fluctuations.  Like the chutes and ladders in the game, they are beyond any control and they can only react the best they can to make the most of the situation at any given time. 

So to all those exasperated buyers, I say take a step back.  When you have hit the point of near maddening frustration with the direction of the rates and when to lock, think in terms of the children’s game many of know and love.  Remember that like the game, you have very little control over which way rates go and there is no fool proof way to predict what rates will be from day-to-day.  By accepting this and by making the best decision that you can with the information that you do have, you will greatly reduce your angst and frustration.  Be assured, that you will eventually reach the finish. So if you want to see what the interest rates are doing today or see how much home you can afford, just let me know, I’m happy to help!

The National Association of Realtors is promoting a “nationwide open house weekend.”  I am participating by having 2 of my listings open this Sunday, April 11. So if you are looking for a wonderful 2 bedroom condo in East Lincoln Park, be sure to stop by 1952 N. Cleveland on Sunday from 2:00 to 4:00. If you are looking for something larger and more upscale, be sure to stop by 2745 N. Kenmore from 11:00 to 1:00. I realize that Lincoln Park is not for everyone, so if you want to see a complete list of Open Houses, there are plenty to view. 

Happy house hunting! And if none of the available open houses catch your fancy, and you’re looking for something tailored to your specific wants & needs, feel free to build your own custom home search. Either way, this is a fantastic weekend to dig deeper into your new home search and do what you can to take advantage of the home buyer tax incentive program.

After a couple of bloody days for mortgages, we finally got a bit of a reprieve.  According to a WSJ article today, consumer lending dropped by 5.6%.  This raised the spectre of a slow and limited recovery, as Americans have chosen to shy away from borrowing.  This, in turn, could ripple through the economy as consumers choose to save instead of buy.  The end result was a retreat from recent movement into the stock market.  How is this good news you might ask?

Generally, the mortgage markets move inversely to stocks.  So, if you are currently in the process of a property search, this cooling of the recent hot equities market may give you another shot at the low rates that we have come to enjoy.  Coupled with low home values and a buyers market, opportunity has once again begun knocking.  If you are on the fence, now is a good time to reach out to your Chicago real estate and lending professionals to give you the agility you need to take full advantage of this potentially perfect real estate storm.