If you have your heart set on buying a home, but you can’t afford to put down a large downpayment and don’t have the greatest credit, an FHA loan might be the right option for you. FHA loans only requires a minimum downpayment of 3.5% of the purchase price. This makes them an affordable option for a lot more people. FHA loans also allow a higher debt to income ratio than conventional financing. You can spend up to 57% of your income on debt. Conventional loans typically cap that around 45% or less. What’s the downside? Well, you have pay an upfront mortgage insurance premium. That’s a pretty hefty amount, usually 1.75% of your purchase price. On top of that, you’re still paying PMI (private mortgage insurance) on a monthly basis. FHA PMI is typically higher than regular PMI. Despite all that, if conventional financing is not an option, then… read more →
According to JLL, the total sales value of apartment building sales in 2015 was almost $139 billion. This was a 31% increase over 2014, when apartment building sales were at $106 billion. The last quarter of 2015 boasts the strongest gains of any quarter ever analyzed and recorded. Moreover, JLL predicts there will be even more growth in apartment building sales in 2016, though at a more moderate rate between 5% and 10%. As rents are going up and interest rates on commercial loans remain reasonable, the increase in apartment building sales does seem likely. Personally, I did see a large increase in apartment building sales in 2015, particularly in Chicago – everything from 2-flats and up were flying off the shelves, so to speak! It also seemed to be a bit easier to get financing for apartment buildings last year than it has been in the past (although that… read more →
The National Association of Realtors recently put out figures that show that the housing market is thriving: Approximately 5.26 million homes were sold in 2015. The median sales price nationwide was $224,100. That’s a 7.6% increase over the median sales price in 2014. In 2015, home values increased over twice the rate of the increase in income. There were nearly 4% less homes listed in 2015 than in 2014. Overall homeownership rates are just below 64%.
The National Association of Realtors surveyed 2,643 agents internally in December of 2015; among other things, they looked into why so many closings get delayed. Here’s what they found: 46% of delays were caused by financing-related troubles. 21% of delays were caused by appraisal issues. 14% of delays were caused because of the home inspection. 19% of delays were caused for other miscellaneous reasons. If you’re the seller, there really isn’t much you can do to push the transaction through, except keep your home in good repair and respond to your real estate attorney quickly to avoid unnecessary delays. As a buyer, though, you should really keep tabs on your lender and make sure they are doing everything in their power to keep your file moving in a timely manner
Let’s say you’re in the unfortunate situation where a contractor has filed a mechanics lien against you. Without getting into the merits of whether or not the contractor has a valid claim, for whatever reason, you decide you don’t want to pay him. So you start looking for problems with the claim. You look and look and look, and aha! You found a problem. Looks like the contractor put the wrong completion date in the complaint he filed with the court. With this error in hand, you seek to get the case thrown out, right? Wrong. In North Shore Community Bank & Trust Co. v Sheffiled Welling, LLC, 2014 IL App (1st) 123784, the property-owner sought to have the contractor’s claim dismissed based on the contractor stating the incorrect date of completion in the complaint. The court ruled that as long as the actual completion date was within the time… read more →
While interest rates went over 4% on a 30-year fixed loan at the end of last year, they have dropped back down to below 4%. The 30-year fixed interest rate is about 3.97% right now. A year ago this week, it was 3.79%. The 30-year fixed interest rate for FHA loans is 3.9%, and the 30-year fixed rate for jumbo loans (where the loan amount is over $417,000) is 4.02% right now. It’s still a good time to buy. In fact, according to the Mortgage Bankers Association, with the drop in mortgage rates this week, mortgage applications increased about 21%. Nearly 56% percent of the applications are for refinancing, however. Only 44% are for new purchases.
Most buyers looking at foreclosed condominiums in Illinois have been told that they could be liable for up to six months of back assessments and related fees. They are also typically told that the foreclosing bank is liable for the association assessments from the first day of the month following the month in which the condominium is foreclosed, all the way through when the bank sells the unit. But what happens when the bank doesn’t pay those fees? A new ruling from the Illinois Supreme Court answers that question, and it turns out the buyer could be liable for a lot more than just six months worth of assessments and fees. In 1010 Lake Shore Association v. Deutsche Bank National Trust Co., 2015 IL 118372, the bank failed to adhere to the Illinois Condominium Property Act, and did not pay the assessments for a condominium even in the months after they foreclosed it. … read more →
A case decided just this month, Wing Street of Arlington Heights Condominium Association v. Kiss the Chef Holdings, LLC, 2016 IL App (1st) 142563, raises the issue of the condominium association’s right to demand six-months’ past due assessments from the buyer of a foreclosed condominium, but with a twist. In Wing Street, the bank that foreclosed the condominium transferred title to a wholly-owned subsidiary after the subsidiary purchased the condominium at the foreclosure sale. The defendant later purchased the condominium from the subsidiary. The transaction was not “closed” in the typical manner. Rather, the subsidiary issued a quit-claim deed to the defendant. Neither party requested nor obtained a paid assessment letter from the condominium association. Thereafter, the condominium association filed suit, claiming that the defendant owed six months’ past due assessments. The case was tried, and subsequently ended up in appeals. The appeals court determined that a wholly-owned subsidiary of a bank is, in fact, a mortgagee-in-possession under the… read more →
If you are a homeowner who pays a mortgage insurance premium, you’re in luck. Congress has passed a law which may allow you to write off mortgage insurance payments for 2015 and 2016. To qualify, you must have either a conventional loan that is eligible for sale to Fannie Mae or Freddie Mac, an FHA loan, a VA loan, or a Rural Housing loan backed by the Agriculture Department. Moreover, your adjusted gross income must be $100,000 or less (or $50,000 or less if married and filing separately). If your income is greater than that, you can still write off the mortgage insurance premiums, but they will be phased out until you hit $109,000 (or $54,900), after which point you will no longer qualify. A large number of homeowners are expected to qualify for this incentive, easing the tax burden nationwide.
Congress just passed the new budget, and there is good news for homeowners who went through a short sale in 2015, or who may be involved in a short sale in 2016. Normally, when a lender forgives your debt during a short sale, it is considered ordinary income to you. For example, let’s say you owe your lender $150,000, but you go through a short sale and all your lender gets is $100,000. In that situation, your lender would typically forgive the balance of $50,000. However, that $50,000 would be income to you, taxed at your ordinary marginal rate. Congress had passed a law so that you would not have to pay tax on debt forgiven by your lender in a short sale, but that law expired at the end of 2014. If your short sale didn’t close until 2015, you were not entitled to the tax benefit. Now Congress has… read more →