Buying a home is one of the biggest decisions you’ll ever make, and if this is your first time going through the process, it can be a little scary. The trick to stress-free home buying is being informed about both the process and your financial situation.
Here are seven tips for first time home buyers in Chicago:
1. Make Sure Your Finances are in Order
Having your finances in order means getting pre-approved for a mortgage and figuring out exactly how much you can spend on a home. Use this New Home Calculator to figure out how much home you can afford, and talk to different mortgage lenders about the options available to you.
2. Inspect Your Credit Report
When you are securing financing, your mortgage rate is heavily influenced by your credit score. While you may have a lot of faith that your credit is in order, especially if you have a decent credit score, it’s still wise to double-check. Sometimes there are errors that you can have erased to improve your score. The U.S. Consumer Financial Protection Bureau recommends using AnnualCreditReport.com to better understand your personal credit situation.
3. Identify Your Top Priorities
What are you looking for in a home? Do you want a large space, or are you willing to sacrifice square footage to be closer to downtown? How important is walkability? Do you have kids who will be attending the local schools? Spend some time identifying your top priorities, as well as the areas where you are willing to compromise.
4. Talk to a Qualified Real Estate Agent
For Sale By Owner (FSBO) is a great option for some, but first-time homebuyers should seriously consider using a real estate agent. Qualified real estate agents know the ins and outs of both the Chicago real estate market and the complexities of the home buying process.
5. Take Notes on Each Home You See
You will probably see quite a few homes. Take a pen and paper to each visit so you can write down the pro and cons of each house you see. Also, take pictures–a lot of them. Your photos and notes will prove invaluable when it comes time to narrow down your choices. Also, understand that you are most likely not going to be 100% satisfied with any house as is. Try to focus on each home’s potential and think about what it would take to reach that potential.
6. Look at the Building Plans for the Surrounding Area
This is an extremely important step. You don’t want to move into a house where you love the area or the view, only to have a new building put up or an old one demolished. The City of Chicago website has updates about plans for new buildings and large-scale renovations.
7. Understand the Full Cost of Purchasing a Home
Many first-time homebuyers don’t understand the full cost of purchasing a home. The sales price and interest rate are only two of the components. There are also costs associated with insurance, closing costs, taxes, and other factors. Here is a guide to the most common additional costs associated with buying a home.
Chicago is a wonderful place to buy a home and settle down, but you have to be smart in the home buying process. These tips will get you started on the path to purchasing your first Chicago home. Visit our Home Mortgage Learning Center for more information.