Redfin's Free Home Buying Class - Chicago, IL

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  • The visual of the HUD would be great and could eliminate some of the verbiage here. REQUIREDA HUD is divided into two parts:Lender charges Includes origination fee, appraisal fee, credit report, insurance and tax escrowsTitle chargesIncludes settlement fee, and owner’s and lender’s title insuranceGovernment chargesIncludes recording fees, recordation taxes and property taxes
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  • 1. Redfin’s Home Buying Class Redfin Far North/Northwest March 11, 2014 Chicago, IL Host: Clayton Jirak @Redfin facebook.com/Redfin
  • 2. Clayton Jirak, Chicago Agent ● I have been a real estate agent for several years ● I specialize in helping my clients find the perfect home, especially new home buyers ● Live in the Ravenswood neighborhood ● Originally from Seattle but lived in Chicago for almost 10 years  Meet my team…
  • 3. Agenda ● Overview of the process ● Are you ready to buy? ● Understanding the market ● Never miss a home ● Choosing an agent ● Touring ● Mortgages ● Break! ● Short sales & foreclosures ● Making an offer ● Acceptance to closing
  • 4. A Little Bit About Who We Are Redfin is a real estate brokerage that has helped over 20,000 people buy or sell a home; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● Right home for the right price  No obligation  Commission credit
  • 5. Understanding the Buying Process
  • 6. Are You Ready to Buy? ● Do you have a family and need room to grow? ● Do you expect to own the home for 5 or more years? ● Have you saved up a down payment? ● Can you rent for less?
  • 7. Overview of a Purchase Research Neighborhoods Real Estate Agents Mortgage Options Preapproval Consider your needs Search Define Preferences Saved Search Home Tours Open Houses Offer Comparables Draft Offer Docs Negotiate Mutual Acceptance Closing Earnest Money Inspection Loan application Title Review Appraisal Financing Approval Closing
  • 8. Understanding the Market
  • 9. Andersonville Overview
  • 10. Andersonville Inventory
  • 11. Andersonville - Statistics for Houses
  • 12. Andersonville: Statistics for Condos
  • 13. Redfin Price Tracker
  • 14. Never Miss A Home
  • 15. Real Estate Sites: What to Look For ● Has all the homes for sale ● Updated every 15 minutes ● Real-time sales data ● Insights from agents ● Lots of data ● Mobile apps
  • 16. Never Miss a Home
  • 17. Choosing the Right Agent
  • 18. What to Ask Any Agent ● Is this your full-time job? ● Where were your last five deals? ● Who else will be working with me? ● When am I committed to working with you? ● Has a client ever filed a compliant? ● How are you paid? ● Can I see some reviews of your work?
  • 19. Redfin Agent Reviews
  • 20. Redfin’s Partner Program Partner agents are employed by other brokerages, and have teamed up with us to provide Redfin-certified service We’ll refer you to a Partner Agent when: ► A home is below Redfin’s minimum price ► A home is outside of our service area ► If it’s in your financial advantage to work with a partner ► We’re experiencing unusually high customer demand We survey all partner agent clients ► All surveys are published on their Redfin page ► 97% of customers would recommend Redfin Partners
  • 21. Seeing Homes in Person
  • 22. Making the Most of Your Tour 1. Bring a camera, notebook & tape measure 2. See how much sunlight the place gets 3. Check the bathrooms for rot & mold 4. Look for wavy or discolored wood siding 5. Make sure water spouts drain away from house 6. Take stock of storage space 7. Turn off any music playing in house 8. Check for hardwood floors 9. Peek into the attic 10. Bring a marble or two 11. When sharing a wall, make sure it’s thick 12. Ignore the appliances and carpets 13. Check the closets 14. Get the disclosure packet 15. Compare the property’s tax records to the listing details
  • 23. Slide 23 of 55 How Touring with Redfin Works ● Led by agent or associate agent ● Up to six homes per tour in two hour blocks ● Go on as many tours as you need ● No obligation, no pressure
  • 24. Mortgages Presented by Amir Syed Perl Mortgage
  • 25. Perl Mortgage, Inc. 19 years in business Proudly owned and operated locally $1.35 Billion in annual funded volume Private Mortgage Banker Ranked in the top 50 out of the top 100 lenders in the nation (Mortgage Executive Magazine, 2012) Recognized as an industry leader by Crain’s Chicago Business, National Mortgage News, Mortgage Originator Magazine, Mortgage Executive Magazine and the Illinois Association of Mortgage Professionals. PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 26. Who is… Amir Syed? Entrepreneur & 10+ year private mortgage banker. Part of the Illinois Mortgage Banker’s Association & Keynote speaker for the 2011 Extreme Entrepreneurship Tour Chicago Association of Realtors Good Neighbor Awards committee member Cover of Crain’s Chicago Business in 2013 Volunteer for “By The Hand” organization Recently engaged! PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 27. Homeownership statistics % saved buying: 47% ● Median home price : $170,000 ● Median rent: $1,700 ● The Windy City is undoubtedly a buyer's a market. ● Home prices in Chicago went through a slump during the second half of 2013 that left median home prices at $170,000 in January, about $10,000 below the national median. ● Meanwhile, rents are well above national levels, having climbed some 7% over the past 12 months. ● For buyers, the savings is significant. According to Trulia, buyers who stay in their home for seven years, will save about 47% compared with the cost of renting a comparable property. Source: Trulia
  • 28. Math Benefits of Homeownership PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339 Year Rent Payment Mortgage Payment Monthly Difference Monthly Tax Savings Annual Difference Annual Tax Savings 1 800 1000 -200 -50 -2400 -600 2 840 1000 -160 -10 -1920 -120 3 882 1000 -118 32 -1416 384 4 926 1000 -74 76 -888 912 5 972 1000 -28 122 -336 1464 6 1021 1000 21 171 256 2052 7 1072 1000 72 222 846 2664 8 * * * * *Savings increase every year
  • 29. When Applying for Financing Request tri-merged credit and check all three bureaus for errors Determine your comfortable total monthly payment Determine budget vs. borrowing power Determine down payment amount scenarios Provide specific documentation (paystubs, tax returns, asset statements) Ask a lot of questions and have fun! PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 30. Pre-Approval A pre-approval letter is very powerful for the negotiation process, get pre-approved early! Confirms your ability to receive home financing The pre-approval process should not take more than 48 hours Information needed: 2012 & 2013 W-2, two pay-stubs, 2 years tax returns, bank statements, etc. Pre-Approvals are valid for 90-120 days, traditionally Applications should be free and credit checks should not cost more than $50 (if any) PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 31. Loan Types • As low as 10% down • Fixed or Adjustable Rate Mortgages Jumbo ($417,000 or above with a 700 credit) • 3.5% Down Payment • “Assumable” Federal Housing Administration Loan (FHA) ($365,700 or less with a 640 credit) • Veterans, Honorably Discharged • 0% Down Payment Veteran’s Administration (VA) (620 credit) • As low as 5% down • Fixed or Adjustable Rate Mortgages Conventional ($417,000 or less with a 660 credit) PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 32. Property Types Single Family Residence Property Taxes, Homeowner’s Insurance Townhome Property Taxes, Homeowner’s Insurance, Association Dues Condominium (Condo Questionnaire) Property taxes, homeowner’s insurance, Association Dues 2, 3, 4 unit (rental income) Property taxes, homeowner’s insurance Challenging. Difficult to obtain financing. PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 33. Credit Score Quick Guide 720+ Excellent. Leads to premium rates and loan programs 680-720 Very good. Creates ease in obtaining new credit. 640-679 Fair. Can suggest a second look from some lenders, and may require additional documentation. 639 and below Challenging. Difficult to obtain financing. PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 34. Requesting Credit: Is It Harmful? - A credit inquiry is a notation that goes on your credit report every time your credit report is accessed by anyone with a “permissible purpose,” as defined by the Fair Credit Reporting Act. - The “rate shopping” feature of credit scores allows you to have any number of mortgage, auto or student loan inquiries on your credit report from within any 14- or 45-day period with only one of those inquiries counting in the score. - Inquiries appear on your credit report for two years, but are only considered by credit scores for the first year. - “Hard” vs. “Soft”
  • 35. Review Your Financial Situation ● Establish comfort level for monthly payment ● Figure out how much monthly income goes towards debt: 28 – 33% healthy ● Pay down credit balances to 1/3rd ● Don’t open any new lines of credit ● Strategically pay off any derogatory credit (if applicable) ● Don’t buy any big ticket items ● Don’t co-sign ● Source of money ● Current employment status
  • 36. Rates PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339 30 Year Fixed 30 Year Jumbo Source: barchart.com, Mortgage Interest Rates Friday, Mar 7th, 2014
  • 37. Start Shopping for Lenders Compile a list of 3-4 local lenders Good sources include: ● Redfin's partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices *Know your lender
  • 38. Local Recommended Lenders In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
  • 39. All About You! PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339
  • 40. PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender. Licensed by Department of Corporations under the California Residential Mortgage Lending Act. NMLS #19186 - Illinois Residential Mortgage Licensee- Office of Banks and Real Estate, Mortgage Banking Division, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, (312) 793-3000, 2936 W Belmont Ave, Chicago, IL 60618 MB0004358 - NMLS #218863, IL:031.0032339 Thank you!
  • 41. Break! Clayton Jirak Far North/Northwest Chicago
  • 42. 10-Minute Break 10 mins 5 mins End Let’s Get Started!
  • 43. Short Sales and Bank Owned
  • 44. What is a Short Sale? The owner owes more on the mortgage than the home is worth ● Usually pre-foreclosure, but not always ● Listed for less than what’s owed to the bank ● Requires 1 - 2 banks’ approval (usually 2) ● May have other liens (taxes, utilities, HOA) We Can Help With a Short Sale! ● See short sales with a Redfin Agent ● If you want to buy, work with a Redfin Agent or a short sale partner agent ● Redfin partner agents work for other brokerages but share Redfin’s commitment to customer service ● Get a 15% commission refund
  • 45. What is a Bank-Owned Property? ● A foreclosed home owned by a bank or lender ● Standard sale but: ► Verbal negotiations ► Long response times ► Repairs unlikely ► Requires an experienced real estate attorney ► Limited or no disclosures ► Banks demand use of their own contracts ► Bank can back out any time until they’ve signed ► Earnest money deposit usually held by listing agent
  • 46. Making an Offer
  • 47. Crafting Your Offer ● Evaluate – your agent will provide you with information about market conditions and recent sales in the area ● Consider the situation – the seller’s preferences, days on the market, and other interest will influence the process. ● Decide on price & strategy with your agent ● Common contingencies & terms: ► Earnest Money ► Inspection ► Financing ► Appraisal ► Title Review
  • 48. Tips for Winning a Bidding War 1. Just win, baby! Simply have the best offer. ► Cash is King ► Escalate your price? ► Tighten your timelines ► Remove some contingencies? 2. Get pre-approved with a local lender 3. What’s important to the seller? 4. Write a letter & appeal to the seller
  • 49. Mutual Acceptance to Closing
  • 50. Steps After Contract Ratification ● Earnest money deposit – usually 1-3%+ ● Inspection – approximately $500 ● Other inspections – radon, lead etc. ● Loan application – 7days or less ● Title review ● Appraisal ● Loan approval ● Document signing ● Walk through ● Closing ● Receive your keys!
  • 51. Home Inspection We recommend that you have a home inspection ● Cost runs $350 to $1200 depending upon the home’s size ● Your agent will accompany you ● Your time to evaluate the property Let’s talk about: ● What an inspection contingency covers and doesn’t cover ● Types of inspections
  • 52. What are Contingencies? This means the seller has accepted an offer on the property, but success may still depend on passing a home inspection or getting financing. Other types: ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● Other
  • 53. Title Companies ● Holds the earnest money deposit ● Prepares the final documents, including the HUD-1 ● Conducts the closing ● Receive and disburse funds for closing ● Arrange for pay off of any liens (sellers’ mortgage, taxes, etc) ● Examines and clears the title to the property ● Records the deed, mortgage and any other recordable instruments ● Issues title insurance to the lender and the buyer
  • 54. Closing: HUD–1 Settlement
  • 55. Walkthrough & Closing A day or two prior to closing you will do a walkthrough to make sure the property is in the agreed upon condition At closing you will sign all necessary mortgage and closing documents and get your keys!
  • 56. Selling Your Home with Redfin
  • 57. ● We’re on your side ► Agents paid on your satisfaction ● Double your exposure ► Premium placement on Redfin ► Zillow, Trulia, Craigslist and Realtor ● 1.5% listing fee ► Professional photos ► Beautiful flyers We’ve helped over 50 people sell their homes in the last six months. Better Service, Lower Fees
  • 58. All Done!
  • 59. So What Now? ● Make sure it’s the right time for you ● Start browsing online ● Check out our Home Buying Guide ● Find the right agent ● Look for a local lender and get pre-approved ● Start seeing homes in person ● Make an offer & close the deal
  • 60. Future Events!
  • 61. Thanks for Coming! Questions? Get in touch: Clayton Jirak clayton.jirak@redfin.com Check out our upcoming classes: http://www.redfin.com/buy-a-home/classes-and-events