Monday, March 30, 2009
Right of First Refusal in Condominiums
5:10 pm cdt
If you own a condo, odds are your Association has the right of first refusal. This means that any
owner who wants to sell their Unit must first give the Association the right of first refusal to purchase the Unit on the
same terms as a prospective purchaser.
The right of first refusal was first established
to protect the value of the other Units in the building by prohibiting the transfer at a ridiculous price or to to screen
prospective purchasers, among other things.
The problem is, FHA just changed their guidelines
to prohibit any lending to purchasers who want to purchase a condominium in a building that has the right of first refusal.
So even if the Association will waive it, it doesn't matter. This poses a problem for clients who only can do FHA financing
because a great majority of the condominiums in the city of Chicago have this right.
being approached by a number of Associations to actually amend their documents to delete this right so that sellers of Units
in the building open themselves up to a larger pool of purchasers.
Contact me for more
information on this.
And don't forget to follow me on Twitter! I just signed up! :)
Friday, March 27, 2009
How Do I End a Home Partnership?
8:30 am cdt
An article that I saw in last Sunday's Tribune reminded me that I have had a few clients call
me in the past year regarding the home co-ownership agreements I have assisted them in setting up.
it's friends, siblings, or significant others, I have dealt with many clients who want to buy property together who are
not married. The number of these types of clients grew during the real estate boom, but now when home values have shrunk,
more and more people are asking me how to get out of these partnerships for various reasons.
you and/or your fellow homeowner want out. here are your options:
1) Sell the home - Hopefully
you have some equity in the home, even if it's enough to break even. This is you best bet. Keep in mind that if both of
you are on the loan and title, you are both equally responsible for the debt, regardless of the financial situation you have
worked out between you.
If you don't sell, one has to buy the other out, and rarely
does either party have the money to do so.
2) Refinance - Perhaps one person wants to stay
and the other wants to go. You can try to refinance and remove the other person from title. If you're the one that wants
to stay, though, you will have to show the bank that you can afford the payments on your own. Most banks will not have a problem
removing a person from title if the other will qualify for the loan.
3) Accept foreclosure
or renegotiate the loan - This in my mind is the worst case scenario. If you are foreclosed upon, both of you will take a
huge hit on your credit score. If have seen issues where one partner will leave the other partner in the lurch and not make
their share of the payments. Keep in mind that BOTH of you will take a hit on the credit score end. Credit is so important
these days. You have a credit check to even buy a cell phone!
Make sure if you do have
a written agreement for co-ownership, which I highly recommend, please make sure there's a provision in there for negative
Tuesday, March 24, 2009
When Will the Chicago Real Estate Market Recover?
5:12 pm cdt
It's the question on everyone's mind: When Will the Chicago Real Estate Market Recover?
According to the most recent issue of Money Magazine, the Chicago real estate market, along with most Midwestern
real estate markets, will recover in the first half of 2010. The median home price in Chicago according to the article "Real
Estate Outlook '09" is $280,000 and will drop another 2.7% before we're through. According to Money, the
Chicago market will hit rock bottom in the 2nd quarter of 2010.
Don't let this information
stop you from buying a home now, though. Prices are still fantastic now, and interest rates are at an all-time low. There's
no guarantee that they'll be as low if you wait until 2010.
And if you own property,
like me, hang tight. Things will turn around before you know it!
Monday, March 16, 2009
Tenant's Rights in Foreclosure
11:26 am cdt
I have a couple who are dear friends and clients who are renters in a property that is being foreclosed
on. They called me this morning to find out what their rights were and I was able to find some information to keep them well-informed
as to their situation.
If you are a tenant in a property that is being foreclosed upon,
you can try to petition the foreclosure court for more time to vacate the property. If you have a written lease, and can show
that you have either been paying your rent (or setting it aside if your landlord is AWOL), you can buy yourself up to 120
days to move. If you are on a month-to-month lease, you can buy yourself up to an additional 30 days.
Cook County is trying to give known tenants in foreclosed properties more notice when they are going to be
evicted. It's been very hard for tenants in the past who have the Cook County police dressed in full SWAT gear banging
on their door unexpectedly to evict them.
The Legal Assistance Foundation of Metropolitan
Chicago offers free legal help to those who need it. They have a hotline you can call at (773) 292-4988 or visit them
Friday, March 13, 2009
What's in a Credit Score?
7:33 am cdt
I have been blogging the past few weeks on credit scores but have had a lot of questions from readers
about just how that credit score is determined.
Different credit reporting bureaus
use different credit scores. There are three major credit reporting bureaus: Experian, TransUnion and Equifax. With each one
of these bureaus, you have what's called a FICO score, developed by the Fair Isaac Corporation. This score can range from
300 to 850 and a higher score, as you know, can get you a better, lower interest rate.
to Fair Isaac (www.myfico.com), the FICO score is calculated based on your rating in five categories:
1) Payment history
2) Amounts owed (30%)
3) Length of credit history
4) New credit (10%)
5) Types of credit used (10%)
Ordering a credit report will NOT negatively affect your credit score, so order one today to find out where
your credit stands.
Monday, March 2, 2009
How to Build Good Credit
10:54 am cst
What is "good" credit? How do you get it?
all very good questions that many clients, especially first-time buyers, ask me on a regular basis.
idea of "good" credit has changed over the past year or so. It use to be that "good" credit was 680 or
higher. Now, however, that "good" credit score is 740 or more. Lenders are getting more and more stringent on their
lending, with credit, income and down payment. A score of 740 or more will give you best lending rates around. A score
between 720 and 730 takes a hit of about .125 percent to the rate. a score of 700-719 takes a .375 hit, and a score of 680-699
takes about .5 percent hit. Think of that over the course of 30 years, or even the average of 7 years that one owns a home,
and that could add up.
So how do you boost that score? Have credit cards. But don't
have too many, and use them wisely. Never have a balance of over 30% of the credit limit, and use the cards on a regular basis.
Also, don't close out cards if you have had them for a long time. The credit score people want to see that you have had
a credit card or cards for a long, extended period of time and used them wisely. Beware of balance transfers, and don't
transfer a balance from a card that you've had for ten years to one that's new and close out the old card. Your credit
score will take a dip.
If you're in the market to buy, take a look at your credit
score first, and take some time to raise it up before you buy. It's a smart thing to do financially.
See my next blog for what to expect from the market in this year and beyond.