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Today is August 16th.  If you are in the market to buy a home, you have approximately 45 days to find a home and get it under contract if you want to ensure you can take advantage of the first time home buyer tax credit.

Why 45 days?  Because in forty five days, it will be around October 1st which is the latest you can get a home under contract to purchase and still reasonably close  on the transaction by the November 30th.   Remember, it takes about 45 to 60 days to get to the closing table from the time the seller accepts your offer.  Thefore, if you expect to finalize your transaction by the November 30th deadline, you need to have found a property and come to terms with a seller by October 1st.

So get out there and find a home; $8000 is a lot of money to pass up.   Time waits for no one…


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This Saturday, June 6th I will be hosting  comprehensive home buyer seminar at Perl Mortgage’s main office located at 2936 West Belmont at 10am.  The seminar will provide all the inside information serious buyers need to know about purchasing a home in this crazy market. 

We will discuss everything from getting qualified for a mortgage to the details of the new $8000 tax credit for first time home buyers.   No question about buying a home will go unanswered!

RSVP is Required.  Please contact me directly at 312-651-5355 or russ@smartmortgageadvice.com

The seminar is free too!

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With the housing market stagnant there are a lot of sellers looking to get their homes sold. For buyers, this means you have the pick of the litter and there are quite a few good deals out there. However, buyers and sellers often forget to look beyond price in their strategies for purchasing and selling their homes. One of the tools that can make buying and selling a better proposition can be the use of seller concessions.

Seller concessions are where the seller gives a credit towards the buyers financing to cover closing costs. Lenders will allow the seller to contribute up to six percent of the purchase price towards the financing costs for loans with a loan to value 90% or less and up to 3% for loan to values greater than 90%.

For Buyers: If you are financing a home, you can use seller concessions to pay some or all of your closing costs. This can make the cost of financing substantially cheaper. For instance, if you are buying a $300,000 home and the seller agrees to a 3% seller concession that equates to $9,000 to go towards your closing costs.

For Sellers: Offering concessions can make your property more attractive in a cluttered market. For example, you may use the concession as part of your marketing plan to attract buyers by agreeing to provide seller concessions to buy down the buyer’s interest rate. A 3% seller concession could reduce the buyer’s interest below market. Instead of that buyer getting a rate of about 6% they could buy the rate down with the seller concession to 5.375% giving them a reason to buy your home instead of a competing property without seller concessions.

Pitfalls to watch for…

While seller concessions can be a great tool for both buyers and sellers, there are some rules that need to be followed.

Seller Concessions must be equal to or LESS than total closing costs. The seller concession CANNOT exceed the total closing costs. For example, if the seller concession is $5,000, then the total closing costs will need to be $5000 or more. The lenders will not allow the buyer to keep any surplus concession as cash. They will either require the concession to be reduced and/or the balance of the seller concession to be taken off the purchase price.

Plan ahead of time for seller concessions. If you decide to use a seller concession, do not attempt to raise the price of the home to cover the seller concession. For instance, the home is originally listed at $300,000 and the buyer wants a $5,000 seller concession. In the past, some agents would just raise the contract price to $305,000 and then offer the seller concession. The problem with this approach is that you run the risk of having appraisal issues as the home may not appraise properly. Second, the buyer is essentially financing the concession as part of the purchase. It is not a true “concession” since the seller will be netting the same out in the transaction. During the boom, a blind eye was turned towards manipulating the sales price, but lenders are becoming much more mindful of such practices.

If you are seller and want to use concessions, you should discuss what you are willing to offer and price the home appropriately BEFORE listing the home.

Seller concessions are win-win for both buyers and sellers if done properly. Remember, negotiating to sell or buy a home is not all about the final price. Sometimes there are other ways to offer value to all parties involved.

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These videos have been making their way around the internet.  Not saying it is all the Democrats fault, but you do have to wonder how they get away with just always saying “it’s Bush’s fault.”  While there is some truth in the videos, what the they should have also pointed out more forcefully was the greed of Wall Street that exacerbated the bad housing policy of the Democrats.  It certainly wasn’t affordable housing programs that forced Wall Street to come up with 100% stated loans for investors or all the other garbage mortgage products we saw over the last couple of years.

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One of the beautiful things about living in Chicago is that it is a city of neighborhoods.  In addition, each neighborhood has it’s own personality and in some ways you can almost tell where people live just by the way they dress and look.  Much like the ubiquitous eHarmony personality test, a new website, Liveherechicago.com uses your personality traits such as hairstyles to how much you spend on jeans to match you to the perfect Chicago neighborhood.  Check it out.

Click here to find your ideal Chicago neighborhood.

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CrainsCrain’s has a great interactive foreclosure map.  Check it out to see the foreclosures in your area by zip code.

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bpgas1.jpgThe easiest way to explain how mortgage brokerages work is by using an unrelated industry.  Mortgages are not something people deal with frequently and because it is financial product, I can understand the confusion.  However, everyone can relate to buying gas.

Let’s imagine you are taking a road trip to visit your family this Thanksgiving.  About 300 miles in you look at your dashboard and the gas needle is at less than a 1/4 tank.  You need to fill up so you pull off the highway to find a gas station.  On the left side of the road is BP and on the right side of the road is Big Moe’s Gas Station.  The BP gas station is brand new with balloons, a kid’s play area, bright and shiny signage, etc.  Big Moe’s on the other hand is pretty rinky dink next to the BP by comparison.

You are there to get some gas, so all you are thinking about is the price of a gallon of gas.  BP has regular gas advertised for $3.00 per gallon and Big Moe’s has gas for $2.95 per gallon.  A large number of consumers are going to go to Big Moe’s to save money and some are just going to go to BP because they are familiar with BP and never heard of Big Moe. 

Most people wonder how Big Moe’s is able to undercut BP.  It is simple.  Big Moe doesn’t have the same overhead as BP.  Big Moe isn’t offering a kid’s play area.  Nor is he too particular about keeping the bathrooms clean.  He is only there for one purpose and that is to offer you gas cheaply.  Since you really don’t care about all the other extra’s BP is offering, you go get gas from Big Moe’s to save a few cents.

Most people would think that BP would be upset about losing business to Big Moe since he is undercutting them.  However, BP is smiling all the way to the bank.  See, Big Moe is actually getting his gas from BP wholesale.  Big Moe is actually selling you BP gas five cents cheaper than the BP gas station across the street.  BP produces too much gas for them to sell only through their company owned gas stations, so they sell extra gas on a wholesale market to privately owned gas stations.   The wholesale gas is cheap enough from BP wholesale so that Big Moe can buy it, add a few pennies to the price so he can make a profit and still offer the gas cheaper than BP does through it’s own retail gas stations.  

Everyone is happy.  You got cheaper gas.  Big Moe’s made a few cents profit.  BP made money selling gas to Big Moe’s.

This folks is EXACTLY how the mortgage brokerage business works.  Mortgage brokerages are just like Big Moe’s and large retail mortgage banks are BP. 

There’s more to this story though… check back tomorrow.

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