Buying a home in Illinois can be confusing at best, and maddeningly exasperating at worst for the inexperienced home buyer. There are so many neighborhoods catering to completely different lifestyles, from metropolitan big city Chicago, to small rural farm towns and everything in between. It can be difficult to know what you want out of an Illinois home, let alone where you want it.
Finding the right Illinois Realtor can make the experience go much smoother for you than if you were venturing the wilds of Illinois real estate alone. Here are a few tips to making your Illinois home purchase blessedly simple and as stress free as possible.
First, understand that there is more than one kind of Illinois Realtor. Selling Agents work for the best interest of their clients, the person selling property. They typically only share information about a particular property with potential buyers that the seller wants them to share. Any information that may be disadvantageous to the seller remains confidential. However, having a buyer's agent as your Illinois Realtor means your Realtor is working for your best interest, and will disclose any and all information on Illinois real estate.
Get to know the local communities and the lifestyle they offer. You should have already determined how much you can afford to pay for your new Illinois home. Your Illinois Realtor can help you narrow your search to neighborhoods that meet your financial framework, and offer the lifestyle you want. Find out about local places of interest; parks, schools if you have children, shopping, theater, churches, recent criminal activity and anything else that may be of importance to you while making your decision on where to buy a home.
Be flexible. Of course there are some things that are important to you and you shouldn't compromise. If you've always wanted to plant and tend a flower garden, don't allow yourself to be talked into buying a home without a yard. However, if you have too many specifications on your list for your Illinois Realtor to look for in a home, you may be disappointed. Be willing to consider many different options as far as architectural style or age of the home are concerned. Remember, improving and updating your home is a fast way to increase its value, and may be worth the investment.
Be prepared to do some researching into the history of any Illinois real estate you are interested in. It's a good idea to have your Illinois Realtor help you order a home inspection. Find out when the house was built, how long it has been on the market and why, what the damage and repair history of the house includes, and any changes and improvements have been made since the house was originally built. Ordering a thorough home inspection can prevent you from buying a home that requires costly repairs after you move in, or at least keep you from ignorantly taking on such a home.
When it comes to making the huge decisions involved in buying real estate, a good Illinois Realtor is your best friend. He or she can help you not only find your perfect dream home, but save you thousands doing it.
Why Do People Pay for Points? Some home buyers pay points to their lender at closing in order to lower their interest rate over the life of a loan. Paying a point on a standard 30-year loan will typically lower the interest rate by .125 percent.
Should I Pay for Points? Buying points can lower the interest rate of a mortgage loan, but that doesn't automatically make it a good option for every situation. For instance, if you only plan to stay in the home for a couple of years, paying for points probably won't help you.
On the other hand, if you plan to stay in the home (and keep the mortgage) for a long time, paying points could very well save you money.
To find out whether or not points will benefit you, you need to calculate your "break even" point. In other words, you need to run the numbers to see how many months you'll have to stay in the home to make points a wise investment.
To calculate your "break even" point:
1. Figure out what your monthly payment would be without buying points.
2. Figure out what your monthly payment would be if you did buy a point (or points).
3. Subtract the lower payment from the higher to determine your monthly savings.
4. Divide the amount charged for points at closing by the amount you save each month. The number you end up with equals the number of months you must stay in the home (and keep the mortgage) to reach your "break even" point.
Example calculation:
Let's run the numbers for a $200,000 loan for 30 years at a fixed rate.
1. 7% interest rate with no points = $1,330.60 monthly payment
2. Buying 1 point for $2,000 = $1,313.86 monthly payment
3. Monthly savings after the point: $16.74
4. $2,000 / $16.74 = 119 months
In this example, the "break even" point is 119 months, or about 10 years. You would have to stay in the house for 10 years to recoup the cost of the point you paid at closing. If you plan to stay in this house for only three or four years, paying for points would be a bad investment.
Conclusion A point equals one percent of your loan amount. You can pay points to your lender at closing to lower your interest rate. Paying points may be a wise option if you plan on living in the home for more than a few years. You should always run the numbers to determine whether or not points are a good investment for you.
* Copyright 2006, Brandon Cornett. You may republish this article in its entirety, provided you leave the byline, author's note and website hyperlink intact.
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