6 Steps to Buying a Home in Illinois

Buying a property is a very important investment in a person’s life, and quite literally, a life-changing one. It involves a significant deal of planning, negotiation, and execution.

From getting a sense of your financial situation to planning out a budget to choosing the right mortgage, it can get overwhelming really quickly. To help buyers out, here are some of the steps that you will need to follow during your home-owning journey.

1. Review Your Financial Capabilities

Evaluating your financial situation should be the first step in your purchase journey. It’s also the most impactful one since it will dictate your budget, and consequently your mortgage, and other expenditures.

After reviewing your financial conditions, you can then set an appropriate budget for the home hunting process. Make sure that you keep a 25% wiggle room for any extra, unexpected expenditures that might crop up down the line.

2. Hire an Illinois-based Real Estate Agent 

This is an optional step, but it is highly recommended that you acquire the services of a real estate agent who knows the ins and outs of the entire transaction process. They not only have a fiduciary responsibility to look out for your best interests but also provide you with nifty recommendations that you’re sure to miss out on otherwise.

Make sure that you interview at least three different real estate agents and only consider ones who meet the following criteria:

• Experience – Your agent should, ideally, have experience of 2.5-3 years in real estate transactions in the area you wish to buy your new home.

• Referrals and Client Reviews – Referrals and positive reviews from past clients are a testament to their competence.

• The number of Successful Transactions for The Past Year– A higher number of successful transactions also attest to an agent’s negotiation skill and knowledge.

3. Get Yourself a Mortgage Pre-Approval

Since sellers also have a significant stake in a real estate sale, most of them would not entertain buyers who do not have a pre-approved mortgage letter to weed out non-serious buyers.

Start by deciding on whether you have enough saved up to pay for a 20% down payment on your purchase price. If you do, opt for a conventional loan. Otherwise, you can check out government-backed mortgages like FHA loans, which only require a 3.5 percent down payment.

Mortgages can also be bought as either fixed-rate or adjustable-rate mortgages (ARMs). Fixed-rate mortgages have a higher initial interest rate than ARMs but do not change during their entire tenure.

This tenure can either be 15 or 30 years. The 30-year mortgages are more lucrative on paper due to their lower monthly payments, but you will eventually be paying a lot more in the long run.

Once you do get your mortgage pre-approval letter, it is absolutely crucial that your financial situation, especially your credit score, doesn’t change to avoid rejection during the closing process.

4. Go House Hunting!

After you have your mortgage pre-approval letter, you can then start visiting the actively listed houses in your chosen neighborhood until you find your dream home!

You can narrow down this search by asking your real estate agent to use a multiple listing service (MLS) to locate homes that meet both your desired price range as well as any other specific requirements.

Attend open houses to get an idea about the listings in your neighborhood and make more informed purchase offers. When you’ve narrowed down your search to a handful of properties, you can then schedule private showings to learn about their intricacies.

It is very likely that you’re going to be sold on a home during one of your private showings, so you should ensure that you ask the sellers about any query/concern that you might have.

Finally, once you have found your dream home, you can then start purchase proceedings by sending a purchase offer. The offer should be competitive, and you or your agent can then negotiate a lower purchase price if you find any “defects” (ceiling cracks, poor lighting, or absence of a backyard) with the property.

5.      Appraisals and Inspection

After an offer is agreed upon by both the parties, the appraisal, and the home inspections process ensure that the property is valued right and has no significant safety violations associated with it.

Appraisal – This is performed by a licensed appraiser whose job is to provide an unbiased opinion about the property’s value. It guarantees the lender that they can recover the loan amount by foreclosing on your home if you default on your monthly payments.

Home Inspection – Licensed home inspectors will evaluate the property and provide a report for the following safety violations:

1. Electrical/Wiring System
2. Foundational Issues
3. Plumbing
4. HVAC System
5. Roof and Flooring
6. Termite Inspection (Required as per the laws of Illinois)
7. Radon Levels (Recommended by the laws of Illinois)

In case any violations are found during the home inspection process, you will have a chance at renegotiating your purchase offer to reflect those issues.

6. The Closing Process

Finally, after all the inspections and the legal formalities, the closing process will mark the wrap for the entire transaction. During the closing, you, the broker, and the seller will meet to go over the closing costs, insurance documents, and title deeds for the final time.

After the legal documents are co-signed by both the parties and the transaction records filed to the requisite public records, you will finally receive the keys and be the new, legal owner of your dream home in Illinois.

Ignorance is a Nightmare in Real Estate

Buying a house or any other real estate can be quite tedious. As apparent from the above steps, they not only involve financial negotiations to the tune of hundreds of thousands of dollars but also have a fair bit of legal compliance.

Most first-time home buyers who aren’t aware of these will find themselves at a loss even before they begin looking for a home. The entire home buying process should be a life-changing one, but it can turn out to be a nightmare if you don’t do your research and know what to expect.