About 30% of real estate buyers were first-time homebuyers in 2020. That’s a slight decrease from 2019 because many first-timers are getting priced out of the market.
There’s low inventory, people are paying cash for homes, and they’re paying well above the asking price. It’s a difficult situation if you’re a first-time homebuyer in Chicago and elsewhere in the U.S.
Fortunately, there are things that you can do to position yourself to own your home. Read on to learn the top tips to become a Chicago homeowner.
1. Calculate the Total Cost to Own a Home
Odds are that you know how much you can afford in Chicago’s real estate market. You also know how much you need for the down payment.
Have you thought of the costs to own the home once you move in? You have insurance, maintenance, and repair costs.
You should set aside between 3%-4% of your home’s value for maintenance and repair costs. If you don’t spend it all, don’t use those funds to go on vacation.
That’s because you’ll have to replace the roof or HVAC system at some point. Those easily cost more than $10,000.
2. Take Advantage of Local Programs
The biggest obstacle for many first-time homebuyers is the down payment. The City of Chicago homebuyer program is available for homebuyers who purchase a home in several targeted areas in the city.
The Illinois Housing Development Authority has down payment and loan assistance programs for first-time homebuyers.
Ask your real estate agent about these programs.
3. Get Preapproved for a Mortgage
Get preapproved for a home loan before you start looking at homes. A preapproval letter helps your offer be taken more seriously.
It can also speed up the closing process. Work with your lender to learn how to get a letter before you start touring homes.
4. Find Homes Purchased for Cash
There are certain types of investors that pay cash for homes and flip them as soon as possible. These cash buyers for houses buy homes as-is, fix them, and flip them for a profit.
Some will even resell the home as-is for below market value. You can fix them and live in the home, rent it, or resell the property.
This is a good option if you want to build wealth with a real estate portfolio.
5. Don’t Change Anything Until After Closing
First-time homebuyers tend to think that once an offer gets accepted, that it’s a done deal. They think it’s OK to change jobs, take out loans and credit cards, and start buying appliances and furniture for the new home.
All of these things change your mortgage application. Your credit score and source of income change, throwing the entire deal into jeopardy.
Don’t do anything drastic until you get the keys. That ensures the deal goes through.
You’re a First-Time Homebuyer in Chicago
Being a first-time homebuyer in Chicago isn’t easy. The current market makes it very difficult to compete with other buyers. You do have some help, though.
Follow these tips and you’ll be on your way towards your new home. For more lifestyle tips, head over to the home page of this site.