Step 2: Financing| Can I Afford This Home?

Making your perfect home a reality

Get pre-approved:

Any offer to purchase requires a pre-approval letter.  There is nothing worse than finding the perfect home and having to search for a lender who can issue a pre-approval letter on a short notice. Pre-approval letters are relatively easy to obtain (automatic underwriting systems are utilized), but many lenders do not work on the weekends and are not easily reachable. With most of home shopping happening on Saturdays and Sundays, not having a pre-approval ready may cost you the home of your dreams.

Getting pre-approved allows you two things:

  1.  You will know exactly what you can afford and what your total monthly payments will be. 
  2.  It will give your offer instant credibility with the seller which becomes particularly important when a home is a good deal and you are competing with another buyer.  I always recommend getting pre-approved with a lender who has a good reputation for getting loans approved smoothly – it will save you many headaches and the seller’s realtor has probably heard about them and will advise the seller accordingly. You are not bound by the pre-approval letter.  You should definitely shop around for the best loan program and rate for your particular financial situation and lifestyle. While competitive rates are important, a savvy buyer will also look for a fast and efficient service which will facilitate a smooth closing.  Having your credit pulled by multiple lenders while shopping for one mortgage loan does not affect your credit score negatively.

Here are a few things to ask your lender when shopping for rates:

  • What’s your current rate?
  • How many points are you charging to make the loan?
  • What’s the APR over the life of the loan?
  • What are your fees: origination fee, appraisal fee, credit report fee?
  • Is the 30-year fixed loan the best option for you or would you benefit from a 7/23 or 5/25 adjustable loan?
  • Are there any special programs offered for the zip code you are looking in or for borrowers with your qualifications (physician loans, down payment grants, VA or FHA programs).

Within 3 days of issuing a pre-approval letter, a lender is required to provide you with a Loan Estimate – a disclosure of the closing costs.  You will need those funds at closing in addition to your down payment. The buyer’s closing costs run anywhere between 2-2.5% of the sale price.  Download a schedule of approximate closing costs in Chicago here.

Here is a list of documents you will need to apply for a loan:

  • Copies of your bank statements – usually 2-3 months worth
  • Copies of your investment account statements
  • W2 forms for the past 2 years
  • If you are self-employed, you will need your tax returns for the past 2 years and a profit-and-loss statement
  • If any of the down payment money comes from a family member, you will need a gift letter

Here is a list of our recommended lenders:

Helen Mandel
Prosperity Home Mortgage
312.218.4888
helen.mandel@phmloans.com

Beata Bukowski
Fairway Independent Mortgage Corporation
773.321.0008
beata@beatabukowski.com
www.beatabukowski.com

Stacey Roberts
Wintrust Mortgage
773.502.1605
sroberts@wintrustmortgage.com

Questions about the pre-approval process? Call us at 773-865-5661 or email us at ivona@ivonahomes.com.