Chicagoland Real Estate Agent? Plus Advice on 1st Time Purchase

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Chicagoland Real Estate Agent? Plus Advice on 1st Time Purchase

Jon Burkhart
Lake Zurich, IL · Member since 2013 · 4 posts · 1 vote

Thank you for the warm welcome I received in my initial post, this is going to be a great group, I can see already.  Maybe you all can help me get creative here, and kick my out of my over-analysis paralysis I tend to fall into.

I have been a renter for..5yrs now.  I would absolutely LOVE to buy a place, but my problem is that I am somewhat cash poor.  After I spent WAY too much on a wedding /honeymoon, it took me some time to pay that off.  Shortly after, my wife and I encountered some pretty hefty medical bills which I am working to pay off in the next 3-4 months.

Here is my dilemma.  Combined we make about 150k per year.  However, I've been throwing 2,500-3,000 per month to knock out debt (as noted above) while I have been paying $1600/mo in rent.  I REALLY want to buy a place, but I have a hard time thinking of putting a pause on paying off my final 10k in debt, to save for a down payment for a place.

Even at 3.5% down, we're talking $7k (down payment), closing costs/fees, and I believe the banks would want to see a few months mortgage sitting in bank account.

Is there any creative ways to get into a home (I make plenty of money), without having to come up with 10-15k up front to do so?  In all honesty, I have not sought out a realtor yet, as I'm not sure if it is possible, and I don't want to waste anyone's time.  I just know I can buy a place for the same if not less than what I pay in rent - but coming up with the up front costs has  been a problem.  IDEAS?? 

If there is a realtor in the Chicagoland area (Buffalo Grove, Vernon Hills, etc.) that can help, I'd be love to have a conversation if you think it's possible from your experience.

**I don't have family that I can borrow or be gifted the money :) **

thanks all!!

JB

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  • Simon Campbell
    Miami, FL · Member since 2012 · 612 posts · 189 votes
    11y

    First, I will be honest, owning a home will turn out to be more expensive than rent when you factor in insurance, taxes, maintenance and repairs. Just wanted to get that off my chest.

    Okay, here are some options: I personally hate FHA loans. Though they only require 3.5% down, they will hit you with a very high mortgage insurance payment that remains attached to the loan permanently, regardless of your equity. It can easily add $100 or more to your payment every month.

    HomePath Loans, on the other hand, does not charge mortgage insurance and they also offer a very low down payment requirement. HomePath finances Fannie Mae REO properties. That can be a good route.

    Personally, I do not see mortgage rates raising anytime in the near future. This will give you time to pay off your debt and then save the $3k per month over the next 6 months. Having $18K as a down payment will get you a good loan with a lower interest rate which will save you tens of thousands of dollars down the road.

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  • Roman Pak
    Investor · Arlington Heights, IL · Member since 2014 · 135 posts · 34 votes
    11y

    I'm in pretty much the same boat @Jon Burkhart . I've decided to take care of my debt first. Not only would little to no debt be a positive when the bank is looking, it helps you save that much more every month. No matter how well you plan and calculate your expenses etc, there's always things that will be unexpected. Not having debt payments and saving a bit more would be more beneficial in my opinion.  

    In our area, $1600/mo for a house with even 5% down wouldn't really go a very long way. We're talking max around $200K, maybe $205K. Unless you're willing to get into something that needs 30-40K in renovations. 

    The way I look at it is that I would rather live in a rental and not have to worry about insurance, maintenance, and taxes for the time being. Once I'm at a comfortable level with my investing then I'll think about buying the place I really want, and not just a place that fits my budget today. 

    Just my two cents.

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  • Simon Campbell
    Miami, FL · Member since 2012 · 612 posts · 189 votes
    11y

    One thing to keep in mind is the fact that available debt can count against you when applying for a loan. If you have three credit cards each with $10k of available credit (i.e. they are all paid off), the lender will factor in the potential to run up $30k worth of debt. So, it maybe a good idea to close accounts that are not in use.

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  • Matthew S.
    Palatine, IL · Member since 2014 · 6 posts · 0 votes
    11y

    there is a wonderful program that sounds like it could really help you right now and it's called welcome home Illinois. It's a $7500 down payment assistance program that only requires you to put $1000 down. I'm about to close on a place in chicago with it, 

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  • Christopher Leon
    Realtor · Schaumburg, IL · Member since 2011 · 289 posts · 118 votes
    11y

    @Jon Burkhart First off, welcome! Second, I am a real estate agent in Chicago land area (Du Page County - I live in Roselle area) I do not know your area, although nice, I am probably not best source of knowledge for houses/investments in your area. Third, glad to hear you and your spouse make so much dough; with respect to the debt, are you paying juice on the $10k right now? What kind of debt is it - revolving, car, installment, medical? My recommendation: if its high interest, stop thinking about buying a house and pay off the debt. If its debt that does not bare interest, from a responsible perspective pay the debt off ASAP, but, from the "I gotta do what I gotta do to get my rear in gear" perspective, I would be stashing that capital to buy a property. On the other hand, like @Simon Campbell said, it will be much more expensive to own than it is to rent, but, here is a concept, why don't you downsize and pay less in rent in somewhere? If it is just you and the wifey, tell her your goals and desires for your family, and convince her to move in a one bedroom somewhere and bite the bullet to save more money. To most, this is unreasonable, and, for those that are married, myself included, may find our spouses to find this suggestion unacceptable... Whatever, its your prerogative. So, do what you must, but sometimes we have to reverse engineer the thought process by thinking of "how can I reduce spending." With all that being said, all I can say is if you and your wife make $150k a year and you have no savings because your buying this or that, paying off debt excessively (which I commend), etc, etc; you both may not have the best grip on your finances as a unit. Don't take it personal or offensive, but, the fact is, if you had made better choices with regard to the wedding, honeymoon, cheaper rent, car payment, wherever those debts came from (excluding medical) then you could have bought your house pre-wedding and been living there right after the honeymoon. Best thing about your situation is you make A LOT of money! You can dig yourself out of this easy. Consider what I mentioned above, and, in answer to your question about a creative way to get into a new house: I suggest you don't try and get creative. Instead, get in CONTROL of your finances. Make some deliberate choices with your wife about money. Save some money, and then get the house. Home ownership can be a gift, or, it can be a curse - depending on how you treat your money will render that answer.

     P.S. I teach individuals and couples about personal finances (it's my way of giving back to my community, and it's a hobby) through Dave Ramsey's Financial Peace University in local Church's. Look up the program and check it out at your local Church or just buy the program and do it in home. It is rock solid stuff to build a strong foundation for investing in the future. Good luck!

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