Mortgages   

Shopping for and securing a mortgage in Illinois can be a daunting process, especially for first time buyers. That’s why I have put together a brief description of what you can expect in the process. Browse the information below for tips concerning your mortgage. You can also use the mortgage calculator on this site to determine what your payments would be with various down payments, amortization periods, and interest rates. And when you are ready to talk to a mortgage professional, feel free to check out the brokers listed on my site.

How much can I afford?

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If you are thinking about buying a Illinois home, or transferring or refinancing your existing mortgage, the first thing you will have to determine is how much you can afford. The easiest way to do this is to use the mortgage calculator on this site – it allows you to change the amount of your payments, the amortization period, and the interest rates, so you can make your plans with the most accurate information.

The mortgage process

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I recommend that clients get a pre-approved mortgage certificate. That is, is a written commitment that you will get a mortgage for a set amount of money, at a specific rate of interest that is guaranteed for 60 to 120 days, depending on the financial organization you choose. This service is free, and does not obligate you to buy.

A pre-approved mortgage gives you an edge. Before you even go house hunting, you will know the size of your mortgage, the interest rate, and the size of your monthly mortgage payments. And with your financing already mapped out, you can concentrate on finding the right home in your price range. Further, a pre-approved mortgage gives you bargaining power when you do find your dream home. If the seller wants to make a quick sale, you may be able to negotiate a price lower than the list price, because the seller knows that you are a serious buyer. On the other hand, if several people are bidding on the home you want, you may decide to offer to purchase at the list price, to beat out earlier offers.

Check out the list of recommended Illinois mortgage brokers on this site.

Making an “Offer to Purchase”

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When you find the home that’s right for you, your next step is to make an offer to purchase the Illinois home from the current owner. The owner can accept your offer, make changes to the offer and present you with a counter-offer, or reject the offer.

The Offer to Purchase is a legally binding agreement between you and the person selling the house in Illinois. It’s a good idea to have your lawyer review the offer with you before it is presented to the seller. The Offer to Purchase sets out:

  • Your name
  • The seller’s name
  • The address or legal description of the property
  • The price you are prepared to pay for the home
  • The items you expect to be included in the purchase price
  • The amount of your cash deposit
  • Your financing arrangements, such as your mortgage
  • The closing date
  • Specific terms or conditions that must be met as part of the purchase
  • A time limit for meeting these conditions

Discuss the Offer to Purchase with your Illinois lawyer before you sign it. Remember, it becomes a legally binding agreement the moment it is accepted. If you decide to cancel an offer that has already been accepted, you could lose your deposit and the person selling the home could sue you for damages. If the seller does not accept your offer, your deposit will be returned.

When your offer is accepted

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Finally all your work has paid off: you’ve found the right home and your Offer has been accepted. Now is the time to finalize the details of your mortgage and close the purchase of your new home. Call your mortgage specialist and arrange to deliver to them:

  • A copy of the Illinois real estate listing
  • A copy of the accepted Offer to Purchase
  • Information on the source of your down payment
  • Income verification if you are employed
  • A letter from your employer verifying your place of employment and income, or T4s and Notice of Assessment, or T1 General Tax Return and Notice of Assessment
  • Income verification if you are self-employed
  • 3 years of Financial Statements and 3 years of Notice of Assessments, or 3 years of T1 General
  • Tax Returns and 3 years of Notice of Assessments.
  • Processing your mortgage application

Your mortgage specialist will want to verify the value of the property you are buying, your current financial picture and your credit history, so a property appraisal and credit report will be ordered.

Also, if your down payment is less than 25%, you qualify for a high ratio mortgage on which you would have to pay insurance premiums. You decide whether you want to pay the premium in cash or have your lender add it to your mortgage amount. Your mortgage representative can contact Illinois Mortgage and Housing Corporation (MMHC) or GE Capital Mortgage Insurance Company of Illinois (GEMI) to make the arrangements.

Be prepared to pay fees for the mortgage application, credit report and property appraisal.

Closing the purchase

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Closing day is the day you become the official owner of your home!

Typically, you visit your lawyer’s office to review and sign documents relating to the mortgage, the property you are buying, the ownership of the property and the conditions of the purchase. Your lawyer will also ask you to bring a certified cheque to cover the closing costs and any other outstanding costs.

Once your mortgage and the deed for the property are officially recorded, you become the official owner of the property.

Congratulations! You’ve just bought a home!