First-time buyer guide

Buying a home in Chicago

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Before you start

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1. Check your credit Lenders set their own minimum. 620 is a common starting line. 740 or higher usually gets better rates.

Get your free report at annualcreditreport.com
Dispute any mistakes right away
Pay down credit card balances
Do not open new credit

2. Save for a down payment On a $400,000 home:

FHA loan: as little as 3.5% down = $14,000
Some first-time loans: 3% down = $12,000
10% down = $40,000
20% down = $80,000, and no mortgage insurance on a regular loan

Closing costs are extra. See the costs screen. 3. Get pre-approved A lender checks your money and says how much you can borrow. Sellers take your offer more seriously.

Lenders usually ask for pay stubs
About 2 months of bank statements
Your last 2 years of tax returns
Your job history

A pre-approval does not lock your rate. Ask your lender about a rate lock. 4. Know your budget A common rule: keep your whole housing payment under 28% of your income before taxes.

Example: $80,000 a year is about $6,667 a month
28% of that is about $1,867 a month
Count the loan, property tax, insurance and condo dues

It is a starting point, not a lender’s answer.

While you look

Good homes are found by comparing facts.

The area

How long is the trip to work?
Is there a train or bus nearby?
Can you walk to food, parks and shops?

The listings

Price per square foot, next to recent sales
How many days it has been for sale
Recent price drops
Condo: what do the monthly dues cover?

The home inspection Often $300–$500

Structure and foundation
Roof
Electrical and plumbing
Heating and cooling
Water damage and mold

Go to the inspection if you can. You will learn how the home works.

For anything about schools or crime, use the official public sources. An agent cannot rate a neighborhood for you.

After your offer is accepted

This is the usual order in Illinois. Your agent gives you your real dates from your contract.

Lawyers review the contractEach side’s attorney reads it. On the standard Illinois contract this is usually about 5 business days. Check yours. They can approve it, ask for changes, or cancel.
Earnest moneyA deposit that shows you are serious. Before you send money, call a number you already trust to check the wire instructions. Wire fraud is real.
Home inspectionYour inspector looks the home over. Your attorney can ask the seller for repairs or a credit.
Condo? The association packageThe building must send its documents. See the condo screen.
Appraisal and the lenderThe bank checks the home is worth the price. If it is not, you will need a plan B.
Title checkA title company makes sure the seller really owns the home and that nobody else has a claim on it.
Final walk-throughA last look, usually just before closing. Check that repairs were done.
Closing dayYou sign, pay what you owe, and get the keys. Bring photo ID.

Buying a condo? Read this

In Illinois the building must send you a package of documents. By law it has 10 business days after your written request. Read it for these six things:

The savings accountHow much money is set aside for repairs, compared with the size of the building?
Big repairs comingThe package must list planned big spending this year and the next two. Roof? Outside walls? Elevators? Garage? Windows?
Extra bills (special assessments)Has the building charged owners extra, or is it talking about it? Ask in writing.
LawsuitsIs the building being sued, or suing someone?
Money owed on this unitAny unpaid dues or liens on the home you want?
InsuranceWhat does the building insure, and what must you insure yourself?

A vague answer is a reason to ask again in writing. Giving up this review to win a bidding war can cost you thousands of dollars later. Have your attorney read the package too.

What you pay at closing

Plan for more than the down payment. Ask for exact numbers from your lender and your title company.

Chicago has a buyer transfer tax

The city charges the buyer $3.75 for every $500 of the price. On a $400,000 home that is about $3,000. Many guides forget it.

Down payment	Your choice
City of Chicago transfer tax (buyer)	$3.75 per $500 of price
Lender fees	Often 0.5%–1% of the loan
Appraisal	Often $400–$600
Home inspection	Often $300–$500
Title insurance and closing fees	Get the title company’s quote
Your attorney	Ask what they charge
First-year insurance and tax savings	Your lender will tell you
Condo move-in or transfer fees	Ask the building

A common rule of thumb is 2%–5% of the price. Your own numbers matter more. Ask your agent to add them up.

Mistakes to avoid

Spending your whole budget

Being approved for a number does not mean you should spend it. Leave room to breathe.

Big buys before closing

Do not buy a car or furniture on credit. Lenders look at your credit again before closing, and new debt can sink your loan.

Skipping the inspection

It costs a little. Hidden repairs can cost much more.

Shopping without a pre-approval

Sellers take offers without one less seriously. Get it before you fall in love with a home.

Assuming it will appraise

Sometimes a home appraises for less than your offer. Have a plan B.

Giving up the condo review to win

Read the building’s package. A surprise bill is much worse than losing one bid.

Take this guide with you

Scan the code with your phone’s camera to open the printable guide. You can save it as a PDF.

On this phone? Open the printable guide.

Bilal Hameed · Crosstown Realtors Inc.

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Bilal Hameed, Illinois real estate broker, License #475.219071, affiliated with Crosstown Realtors Inc. · 1455 W Irving Park Rd, Chicago, IL 60613 · Equal Housing Opportunity
Adapted from Crosstown Chicago’s First-Time Home Buyer Checklist, used with permission.
General information only, not legal, tax or lending advice. Ask your attorney and your lender about your own situation.