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Home Buying Budget
How Much House Can I Afford?
There is a big difference between mindlessly scrolling through Zillow and perusing what’s out there on the market and sitting down to figure out how much house you can afford. Making the steps to save for a house and begin to search in earnest for your new home in IL are two very exciting checkpoints on the way to home ownership. Somewhere in between all of the saving, planning, and looking is the actual number-crunching that will tell you how much house you can afford in IL.
What often starts with casual musings, a glance at your bank statements, and maybe a casual conversation at the dinner table quickly changes to logistical and strategic thoughts about how to swing a mortgage payment in IL. After you’ve got a number in mind that’s feasible — then it’s time to decide if you can truly afford that monthly payment or not and still maintain a lifestyle you enjoy.
Luckily, working with a great loan officer, like George Chilczenkowski and figuring out what your interest rate could be is a great starting point. Once you have that, your loan officer and a dozen different calculators across Google can easily crunch the numbers for you. [company name] offers a great calculator if you’re just playing around with numbers before contacting a professional to get the process started.
There are two main factors to consider when asking yourself how much house you can afford. One is how much monthly can you afford to pay towards a mortgage and the other is do you have the cash on hand (or coming) to fix what either needs to be fixed or you want to update. There’s not much worse than spending your hard-earned savings on a fixer-upper because it’s all you can qualify for and then not being able to make the improvements promptly.
EXAMPLE SCENARIO
While every home-buying situation is unique to the buyers, sellers, and the market — a few rules of thumb are good to follow. In general, most financially savvy individuals advise you to not spend more than 28% of your gross monthly income on home-related expenses. This includes your mortgage, insurance, utilities — everything. To make the math easier and for the sake of simplicity, taking a yearly income of $100,000, whether between two people or individually is irrelevant in this case. With an annual income of $100,000, buyers should be aiming to spend no more than $2,300 a month on their mortgage or rent. Again, there are specific factors for every situation and that’s why it’s so important to discuss all of your options with your loan officer or mortgage broker.
Perhaps unsurprisingly, many do not follow the 28% “rule” and spend much more of their income on their housing situation — hence the term house-rich and cash-poor. Especially in metropolitan or coastal areas, homes are incredibly and increasingly expensive and many spend around 40-50% of their monthly income on housing costs of some sort. The solace one can take if you’re in this boat, or about to be, is that if you’re paying an astronomical amount towards your mortgage in comparison to your monthly income, at least you’re paying towards something for yourself and increasing the equity you have in your home instead of renting and paying someone else’s mortgage.
The Bottom Line
There’s a lot to consider when deciding how much house you can afford and how much house you’re willing to afford. Factors like lifestyle, location, plans, and goals all come into play when making large financial decisions, and buying a house is probably the biggest financial decision of them all. Get in touch with George Chilczenkowski – Buckeye Mortgage of Illinois to review your options now.
How To Stay Upbeat When Your Offers Aren’t Getting Accepted
Hearing “no” again and again can be challenging — especially when it comes to trying your hardest to purchase a home in IL. The defeat many buyers feel when it comes to bidding wars and the like is one of the hardest things about looking to buy a house in IL.
Between increased home prices in IL and decreased home inventory; buyers can find themselves downtrodden in their dreams of becoming a homeowner (even if it’s for the second or third time). Many buyers who already own homes get frustrated more quickly because they’ve gone through the process before and are ready to upgrade.
Houses are often put on sites like Zillow and Redfin and by the next day; they’re pending sale. This can be heart-wrenching for hopeful prospective buyers who weren’t quick enough. Some homes last longer on the market and people have been able to go see through a showing or an open home and perhaps get attached to it — only to enter a bidding war or see the home sold outright for higher than the asking price.
What a lot of this comes down to is how quickly you can qualify for a good loan in IL with a sizable down payment and how “on it” your real estate team is. In busy markets like so many today, there’s little to no room for biding your time.
Perspective
It’s vital to keep perspective when you keep getting turned down. First of all, as hard as it is — try to remain grateful that you’re able to look into purchasing a property in IL in the first place. Many people are never able to be homeowners. Secondly, and thankfully, a bit easier — hold onto the perspective that what’s meant to be will work out and more homes will continue to come available in IL.
Persistence
If at first you don’t succeed; try, try again. This isn’t ideal or very fun — but it truly is the only way that buyers are going to successfully purchase a house in IL. The good news is that people are moving more than ever right now and new homes are being built at an alarming rate — so very rarely will buyers have to wait too, too long to get their set of keys to their new home.
Continuing to keep an eye out and making offers is the straight and narrow path to escrow.
Flexibility
Everyone’s favorite “f-word” — flexibility. Having one’s sights set on an open floor plan, a single-story home, or no need to repaint will get homebuyers stuck pretty quickly. In any market, but especially competitive ones like we’re seeing so much of currently, there must be room for flexibility. Going into a home with an open mind is crucial to visualizing what the space can be when the owner’s furniture and family photos are long gone. While some factors may be non-negotiables, it’s best to keep that list down to the core needs that a homebuyer in IL simply cannot live without; a 3-5 maximum is a good place to start.
Thinking about what a home could be instead of what it is, maintaining perspective of the realities of the market, and persistence are the three key ingredients to weathering the storm when your offers are not getting accepted time and time again.
There’s a lot to consider when deciding how much house you can afford and how much house you’re willing to afford. Factors like lifestyle, location, plans, and goals all come into play when making large financial decisions, and buying a house is probably the biggest financial decision of them all. Get in touch with George Chilczenkowski – Buckeye Mortgage of Illinois to review your options now.
Handling Rejected Offers
Common Purchase Mistakes
How To Avoid Purchase Mistakes In The Future
When going into buying a home in IL, there are a lot of mistakes that can be made by all parties involved. Buckeye Mortgage of Illinois wants to make sure that you, the buyers, are aware of some of the largest ones to best serve you and streamline the buying process. While this list could go on for quite some time — we’ve decided to focus on five of the most common/easily avoidable mistakes that can make buying a home in IL as painless as possible.
Your real estate agent and loan officer should walk you through all of your options and have your best interests at heart when it comes to making such a large purchase — and in almost all cases — they will. But, it doesn’t hurt to have your education going into the process, or maybe you just need a refresher!
Just Getting Started
First and foremost, it’s vital to try to not get too attached to a specific home or neighborhood before you’ve figured out how much house you can afford in IL, applied for at least a pre-qualification, and begun to look for homes with an agent. The reason being, besides the obvious of protecting your feelings, is that the market moves so fast these days and one can get easily frustrated and discouraged if they aren’t able to be flexible and open-minded during this process.
Working on not getting too attached goes hand in hand with remaining realistic when it comes to your home searches and expectations for the process. There’s no need to sour the experience before you even really get started! A lot goes into being realistic and it starts with expectations. Don’t expect the process to be a one-stop shop, don’t expect all your favorite homes on various sites like Redfin or Zillow to be in your price range, and speaking of price range — it’s incredibly important to be realistic about that. Nobody wants to be house-rich and cash-poor and while it’s more common than not, there’s not much worse than living in a home you can barely afford and reminiscing on your old lifestyle.
In the Middle
Buckeye Mortgage of Illinois will work with you to make sure you aren’t putting too much or too little money into a down payment. This is imperative because again, you need to have reserves in your savings and be realistic about your finances. You also don’t want to not put enough down and either a) get continuously outbid by other offers or b) have an astronomical mortgage payment. A one-time “ouch” payment is a lot easier to recover from than a monthly payment that cleans out your accounts.
While you’re in the process of making offers on the homes you’re looking to buy, it’s important to work with a dedicated mortgage professional like Buckeye Mortgage of Illinois, to look into any loan types and programs in IL that may be available to you. There are loan programs for first-time home buyers in IL, some professions, and several other variants out there. Buckeye Mortgage of Illinois will help you figure out what’s best for you and what will give you the most bang for your buck which is so important in large transactions that have lasting repercussions (30-year mortgage payments, anyone?).
Wrapping Things Up
While we already mentioned being cognizant of how much money you’re putting into a down payment, it’s worth mentioning again that the vast majority of the time it’s incredibly important to not spend every last drop of your savings. Emergencies happen, both home-related and not and there are always vacations to take and life to enjoy — your home-buying process shouldn’t rob you of your life (at least not for very long).
Something that we all wish we could sometimes forget about but need not is preparing for closing costs, renovations, and repair costs. Not preparing for renovations and repair costs is a giant mistake when buying a home. Things will break and need to be fixed, you may want to repaint, or appliances may need to be replaced — and that list doesn’t ever end. It’s important to factor these costs into your budget before closing on a home so that you don’t have a bad case of buyer’s remorse.
While every mistake is a learning opportunity and buying a home is almost always a great idea, keep these five mistakes top of mind as you enter into this next phase of your life. Buying a home in IL can be incredibly stressful and the more we can lessen that, the better the experience is for everyone involved.
Your First Home
Preparation
You’ve rented all your adult life to this point and you’re finding yourself thinking: What now? It sounds like you’re looking to buy your first house in IL. Diving into homeownership looks different for everyone. Maybe you’re just thinking about thinking about it or maybe you’ve already contacted an agent — either way, the journey starts here. The trickiest part is that there is no formula for perfection and not for ease. The path of least resistance rarely leads you to the mountaintop and it certainly won’t lead you to the hallowed grounds of homeownership. The qualms surrounding the leap from renting to owning are enough to scare anyone away. Waiting for the electric or cable company to show up between 4-8 PM is even less enthusing when you’re footing the bill. When you don’t get to call your landlord anymore to fix the leaky faucet or the running toilet — you’ll grumble your way through calling a plumber and searching for a wrench. These are realities of owning any home; not just your first. It just so happens your first home is where you learn the ropes and learning curves.
According to an article on Bloomberg.com, at the end of 2019, the median age of first-time homebuyers was 33 and on the rise. The phantom of affordable housing in IL is surely a contributing factor to this statistic, not to mention the overall burden of saving tens of thousands of dollars while paying thousands of dollars in rent. Buying a home for the first time is harder than ever coupled with the fact of the responsibility it brings. That’s enough to stress anyone out. Growth in any form is often scary, but why? Is it unknown? Is it the discomfort? Is it the mortgage payment in IL that makes you want to run and hide? Or how about the median price of homes in IL? Probably a little bit of all of the above plus your circumstances, if we had to guess.
Buying your first home is electrifying in the best and the worst way for a myriad of reasons. It is the unknown and the discomfort. It’s also the mortgage payment. Buying your first home in IL induces fear long before you’re handed the keys — it starts with the wishing. Whether you’re single or in a partnership; at some point, you say “I think I’m done renting” and then your phone magically downloads for-sale apps. The next thing you know, your search history is all address names and questions like “How much house can I afford in IL?” and “What is the average down payment in IL?”. Maybe you’re even listening to podcasts and peppering your friends and families with questions about equity and the pros and cons of homeownership. The rabbit hole of information and conflicting opinions and statistics surrounding buying a house in IL is hard to navigate, and that’s why you need a great team to help guide you.
First of all; the information is good! Keep it coming! The more you know; the more you can ease your qualms. Research! Use your tools! The internet, homeowners you know, social media — go wild! Most importantly, get yourself a great team of professionals who can tell you what’s what. It’s important to know what’s realistic and what’s not and also what homes are worth and what they’re not. A great network of those who’ve made real estate their field of expertise can help you differentiate between what’s a smart investment and what’s sure to haunt you for years to come.
Seeking the counsel of professionals yields more value than those of your peers. Odds are, you’re in a different place in your home-buying journey than others around you. Depending on your profession, your rate of savings, your current living situation, if you’re purchasing your home alone or with a partner, etc. — the variables are endless and they all make your home-buying journey unique to you. The good news is Buckeye Mortgage of Illinois is there to help guide you and ease your fears.
Positives
Having a home that’s all yours is something to be proud of! Take solace in that accomplishment; even on the days, when your home seems to be swallowing you whole with its needs. Think of the relationship you have with your home as transactional; it shields you from the elements (or it should) and offers you shelter and you offer it the occasional nail, hammer, and new shiny appliance. The trade-off, most of the time, seems more than fair. As you hang new pictures on the wall, add ticks to the height measurements of your children behind the laundry room door, and add new magnets to the fridge from your experiences and adventures — your house begins to look more and more like a collage of your and your loved one’s lives. Then one day, out of the blue, you realize you’ve made yourself a home.
If the homebuying process was relatively easy, the joy you feel when purchasing your first home can feel a tad eerie. It’s all going so seamlessly, the timing was so great and now you’re waiting for the other shoe to drop? Don’t worry, it will. It’s the nature of the game! Go into buying your first home, and all homes for that matter, with the mentality that things will break and that life is expensive. Twist your perspective a bit — each time you need or want to fix something is a chance to both invest sweat equity and customize your home. Some homeowner’s favorite memories are the times they stood on the bottom of a ladder holding a flashlight while their partner fixed a wiring issue and they had a great conversation. Some homeowners love to look at the paint they laboriously coated each wall in. Some even love to relish the time they just hired a fantastic handyman to fix the issue and enjoyed their Saturday. House projects are never ending it seems, so if you can find this to be an opportunity to always be customizing and learning — you’re set up for success in more ways than one. Whatever method you choose to work on house projects with; chances are you’ll get your fair share of them all and even when you thought you fixed the leak under the kitchen sink only to come home to a flooded kitchen — it’s all a memory and it’s all a lesson.
While your house costs you a pretty penny; the value in the memories it will give back — that’s priceless. Your first Halloween — all the entertaining trick-or-treaters and spooky decorations (in our dream world, COVID-19 has not robbed us of our holiday traditions). Carving pumpkins to set on your very own entryway! Putting the turkey in your oven to host your first Thanksgiving. Stringing up lights during the holiday season, perhaps pretending Santa shimmied down your chimney, and ringing in the New Year — they’re all that much more special when it’s in your own home.
Buying a home is no place for “maybes” and “what-ifs,” please throw your passivism to the wind! This is a house that you’re going to shift into a home and you’ll come back to that place day in and day out — you need to feel committed to the cause. Why? Because home ownership is not for the faint of heart. It’s a place for passion and dedication. The good news? It’s relatively easy to feel connected to the place you lay your head each night. The memories you create in your first home are as sweet as they come. There’s nothing quite like the rose-covered glasses that pervade the lens of a new home, especially when it’s your very first. The weird twist you have to do with the faucet to get the hot water to come out? Charming. Revel in this inherent loveliness and use your excitement to motivate you to fix the not-so-desirable aspects of your new abode — those rose-colored glasses have about a ninety-day expiration date before you’re cursing the upside-down light switch that was a previously delightful nuance.
A Few Negatives
We’re sorry to say that it isn’t all sunshine and rainbows in “New Homeowner Land”. There are some cons worth mentioning, but remember it’s all about perspective and there’s very little that time or money can’t fix!
The process of purchasing the actual home is reported to be the most stressful part of actually owning a home in IL. This is great because it means that you get the heaviest lifting over with first, but it also means the beginning can make you want to run for the hills — so buckle up! Getting together all your paperwork with your personal information on it, figuring out what down payment you can truly afford, and seeing where your credit score lines up regarding the loan process — are all daunting. If buying a house with your spouse; you have to agree on a location and layout and down payment and all. the. details. Once you agree, you are not guaranteed to get accepted on any offers you put in. The process of buying a home is grueling for many individuals and couples. It’s a relentless practice of handling rejection, adjusting expectations, and staying updated with each listing. Throw closing costs in and various last-minute hiccups and many become disheartened and frustrated — but then you’re handed your keys!
When the rose-colored glasses begin to fade and suddenly the “fun” way your A/C only sporadically works is no longer tolerable because the late summer heatwave has hit — it’s a killjoy. When you bought the house with all of the electrical wiring passing inspection but now your lights are flickering and a new bulb didn’t solve it; it’s not ideal. These things aren’t fun or glamorous. They often occur at the worst possible time in your personal and professional lives but they’re just a part of the gig and the sooner you make peace with that, the better. Your neighbors may not be all they were cracked up to be. Or someone forgot to tell you about the teenagers who drive by at 50 mph, blaring rap music, at 11 PM every weeknight. You might find yourself wondering when you got old and grumpy. These are common symptoms of “Overwhelmed Homeowner Syndrome” but it does pass!
When it comes down to it, the reality of the situation is and always will be this: when you own a home there are times when it feels like you bit off more than you can chew. That’s the net downside to owning anything really — it doesn’t always work. Sometimes homeowners simply run out of bandwidth to continue chipping away at projects while appliances continue to randomly break. This brings us back to the other two golden pillars of life: time and money. If you don’t have the time — you need to find some money. If you don’t have the money — it’s best to get comfortable with practicing patience. A balance of both is always great.
It’s nerve-racking to realize you need to save enough for a downpayment, any immediate renovations, and then some for the emergency fund of appliances, windows, and other household necessities that just give out occasionally. The calmest individual can still feel overwhelmed by all of these sudden needs but the good news is that it is temporary!
Realities
The wonderful thing about owning your first home is also what makes it so frightening — but isn’t that always the way? It’s the finality of it all and the true ownership. That ownership means that your home is yours to create memories with, to build the foundation of your life within — there’s nothing more magic than that. Maybe you’re one of the lucky few and your first home will be brand new and practically perfect in every way. In that case, this too is magic by the very nature of the hard work and opportunity that has come together for you to be in your fantastic new dream home. Of course, the levels of fear vary from situation to situation. The responsibility of it all causes a knot in your stomach. All of the decisions: floors, paint, doorknobs, oh my! The water leak that makes your new luxury vinyl plank floors bubble? Far from ideal, but these are risks you must be willing to take.
Many homeowners share that the concept of not being able to “get out of their lease” sends them into a panic. Owning a home means either you’re living in it, renting it out, or selling it. All options require a good amount of effort on the homeowner's part. Thankfully, a quality home inspection can ease buyers’ minds on any concerns that might make or break the deal.
If you’re like most homebuyers; your first home is not your forever home. Once you move in and fall in love with your new home and you’ve fixed and updated every last baseboard to your heart’s desire — you’ll never want to leave. This is both sad and wonderful — how wonderful it is to feel so much gratitude towards something that caused you more than a few gray hairs and how sad it is to say goodbye or to rent it out to others who may not love it the way you do. This juxtaposition of feelings is homeownership in a nutshell. You loathe your creaky doors but you don’t want to open any new ones. You complain about your reclusive neighbors but you love that you don’t have to attend weekly block parties. You dream of a bigger house but don’t know how you’d clean anything an inch larger than the one you already have.
Maybe the scariest thing of all about buying your first home is that you don’t know the definite answer to any of the questions you’ve had or we’ve pondered until you’ve made yourself a homeowner. The wondering itself isn’t enough — you’ve got to leap, despite all of the questions you still have. Do you want to own a home? You’ve got to bite the proverbial bullet. Good luck and happy house hunting!