Becoming a Chicago homeowner is a big step – but a worthwhile endeavor. With low interest rates, the average mortgage is cheaper than the average rent. The ability to build equity and profit at resale make chasing the American Dream even sweeter.
You might have a substantial down payment and a list of target neighborhoods ready, but the home buying process is nonetheless overwhelming. We understand completely – you’re making the largest financial pursuit of a lifetime. To make things a little less scary, we educate each new buyer on what to expect before embarking on this exciting journey toward homeownership.
Ready to get serious? Consider the 15 steps first-time home buyers in Chicago should anticipate:
Find a Realtor®
You’ve been casually perusing Chicago homes for sale and have a pretty good idea of what you want. It’s now time to contact a knowledgeable Realtor. Realtors help narrow neighborhoods, find properties on and off the market, write up offers and counteroffers, attend your inspection and smooth out potential complications during the transaction. But, that’s just the tip of the iceberg. Z Chicago real estate agents are available to answer questions and concerns 24/7 to help you make the right decision. Think of us less as an intermediate and more of a friend you can consistently rely on – now and in the future.
Talk to a Lender
After discussing a strategy to navigate the home buying road ahead with your agent, it’s time to contact a lender. Lenders provide buyers with pre-approval letters, which reveal your total buying power so you can search for homes that fit your budget. Preapproval letters also help hopeful buyers stand out in competitive markets like Chicago.
Define Your Home Search
You now have a pre-approval letter and a Realtor by your side. As your agent sends potential listings, don’t be hesitant to provide feedback. We’ll take the time to listen to your must-haves seriously, while maintaining realistic expectations based on your target home price. As you run through available properties, take time to examine each thoroughly. Homeowners Association (HOA) dues at condo buildings and the going rate of parking spots varies depending on neighborhood and property type. Your agent will make sure these factors still fit into your total budget, but only you can determine if a home is worth the added expense.
Find Your Dream Home
After searching online, attending multiple open houses and scheduling showings, you finally found the perfect place. Congratulations! Don’t pop the champagne just yet – there’s still work to be done.
Make an Offer
Making an offer can be one of the most stressful steps of buying a home in Chicago. But an agent is here to help ensure you get your money’s worth. In competitive markets, homes often sell above list price due to bidding wars. If there are four other qualified buyers waiting wallet in hand, upping your budget or forgoing simple repairs doesn’t hurt. We’ll discuss this with you in private and provide reasonable recommendations.
If you receive a counteroffer, you may want to negotiate with a seller. We recommend entering negotiations with an idea of where you want to draw the line.
Keep in mind, you do not have to use your total preapproved loan, particularly if you foresee other expenses in the near term. Lower mortgage payments allow you to spend money on value-add home improvements or other investments. Plus, a smaller loan might help you prepay your mortgage and increase your equity sooner.
Sign a Purchase Agreement/Sales Contract
Assuming your offer and terms were accepted, it’s time to sign a purchase agreement or sales contract to document your agreement.
Go Under Contract
The sales contract is signed by all parties and the home officially goes under contract, taking the home off-market to other buyers in your area.
Enter Attorney Review
Next, find an attorney to ensure you dot your i’s and cross your t’s. Z Chicago agents have a network of veteran real estate attorneys to recommend, but you are not obligated to use an attorney suggested by your agent. Attorney review lasts until your appraisal is complete and your contingencies are met.
Conduct a Home Inspection
The next step is to find a certified home inspector to search the property and ensure everything is in working order. Like our attorney network, we have home inspectors we trust and recommend to buyers. But, buyers are welcome to find their own inspector if preferred.
Home inspections are not required to close the deal, but forgoing this step puts you at a financial risk. The cost for a home inspection for a Chicago condo generally ranges between $300 and $500. Structural, electrical or plumbing issues can cost you a great deal of money after closing. You’re making the largest financial decision of your life, and the risks are too high to chance. We recommend buyers personally attend their home inspections and take thorough notes. This is a great opportunity to learn about the inner workings of your new home, and what to do in case a problem arises.
Negotiate, if Necessary
Hopefully, your home inspection revealed no or few problems that are easily resolved. But, if a glaring structural issue was revealed, you can request the sellers fix the problem or credit you back the anticipated cost of repairs.
Get an Appraisal
Shortly thereafter, your lender will request an appraisal of the property to ensure the loan matches the home’s value. In general, buyers or Realtors rarely attend the appraisal. However, if you are financing your new home, ensure the appraised value is equal or ideally above the agreed upon sale price. If the appraised value is below your agreed upon amount, you can either pay the difference out-of-pocket, or request for a second appraisal to take place. The appraisal typically costs between $300 and $500, but can be more for large properties – or if it is a rushed request.
Submit the Loan
Assuming your new home appraised at or preferably above the sales price, your lender submits all paperwork to the mortgage underwriters for approval.
Attend the Final Walk-Through
The final walk-through lets buyers confirm promised repairs were completed and the home’s condition meets expectations. Schedule the final walk-through as close to the closing as possible to allow sellers the maximum amount of time to move out and have it ready to occupy directly after closing. Plus, scheduling the walk-through and closing on the same day minimizes time off work.
Attend the Closing
At last, closing day. This is the final step before the home you’ve been anxiously waiting to occupy is officially yours. The closing generally takes between an hour and two hours but fluctuates depending on preparedness and transaction stability thus far. Don’t forget to bring your favorite blue pen, a legal form of identification and your checkbook.
Live Happily Ever After
Congratulations! You survived buying a home in Chicago. With your fresh set of keys in hand, you can formally refer to yourself as a proud Chicago homeowner.
Ready to make the transition from renting to buying? Call Z Chicago at 312-810-2295, fill out a contact form or start searching Chicago homes for sale today.