With a new year comes new opportunity. Like many other investments, however, real estate market prices can fluctuate considerably, and timing can be a key factor. If you aren’t ready to settle down in one North Shore spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you’ll need to determine how much you can spend and where you want to live. If you are ready to make Chicago’s North Shore your long-term destination, and you are buying for the first time, below is a guide that can take you from prospective buyer to homeowner:
1. Worth Repeating–Don’t buy if you don’t plan to stay .
If you can’t commit to remaining in one North Shore 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.
2. Start by confirming and double checking 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. Your credit can also determine the interest rate rolled into a mortgage. Rates are currently low, but ideal credit ratings are required to take advantage of substantial savings.
3. Before starting to house hunt, get pre-approval.
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.
4. Get professional real estate guidance.
Even though the Internet gives buyers unprecedented access to Chicago’s North Shore home listings and property sale information, most new buyers (and many more experienced ones) are better off using a professional realtor. Look for an exclusive buyers real estate agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process. Having someone with extensive real estate market experience and insight on community resources/trends will benefit you most.
5. Aim for an affordable home.
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 expense calculators available online to get a better picture on how your income, debts, and expenses affect what you can afford. See a sample affordability calculator HERE
6. Putting 20% down is ideal but not always necessary.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price. Each year incentives present themselves for first time buyers. Fannie Mae and Freddie Mac may be sources to depend on for program options.
7. Buy in an area with great schools.
In most areas, this advice applies even if you don’t have school-age children. Reason: When it comes time to sell your North Shore property, you’ll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.
8. 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. Additional information can be found HERE
For questions or a guide documents on buying a home, our North Shore office can help. We are located in Glencoe, Illinois at 640 Vernon Ave. Coldwell Banker has been a trusted name for North Shore real estate for over 4 decades. Our expert reports, trends, analysis, community involvement and superior customer service are legendary.