Chicago's Source for Buyer agent mortgages and home re-financing, 1st Home Group

Jeff Kropp,
Buyer's Agent

Phone: 773-321-7022

Address:
1st Home Group
1122 W Armitage Ave Chicago, IL 60614

Buyer Testimonials:

"Jeff has done a great job handling my loan on my apartment building. After a couple refinances, my monthly payment has dropped at least $500 a month. And these are no-cost refinances, so I am never out-of-pocket at my closing." Rich Caner, MD

"I worked with Jeff and 1^st Home Group to find my condominium in Lincoln Park. I could not believe how smooth the process was. Within a month, I had found the perfect place with my own rooftop deck. They handled all the paperwork and got me a great low-interest loan. A month later, I closed on the place. I had always heard home buying would be a pain; not with these guys." Dave Bennett

ABOUT YOUR HOME SEARCH

I have been searching for a home without an agent, by looking in the newspaper or visiting open houses. Why do I need a buyer's agent?

A buyer's agent is free and will help you in many ways. We will help you narrow your search and set up appointments at homes that meet your criteria- rather than having you waste time at open houses or looking at sold homes in the newspaper.Next, we make sure that you are not paying too much for your home by looking at comparable sales data. We also make sure you are approved for a loan and make sure that you prepare your offer in way that favors you rather than the seller. For a more detailed description of our services, see Our Free Services

How long does a home search take?

Though every search is different, it generally takes between a few weeks and one month to find the right home. Of course, some buyers find the perfect home on their first few tours, while others may take a little longer than a month because they are searching in different areas for different types of homes. If you are a renter, you need to determine when your lease expires and whether the landlord will let you out of the lease early.

We have found a few homes we would like to see (through your website link to the MLS, newspaper, or otherwise). How do we arrange a tour of these homes?

We will arrange the tours for you and accompany you. Prior to the tours, we need to meet with you briefly to discuss our policies, examine your financing, and just get to know you a bit before we embark on your search. If none of these homes suit you, we will set up a personal web page for you that is linked directly to the MLS. This page will be updated in real-time with a list of new properties that match your criteria, from which you will select your favorites so we can arrange tours.

If I see a home I really like, what do I do next?

You meet with us to determine what the amount of your initial offer will be. We will examine the recent sales data from comparable homes and make some recommendations to you. Next, we will complete the offer for you and explain the key items to you. The seller usually then has a few days to consider your offer and decide whether to accept it or make a counteroffer (i.e., the seller may ask for more money)We may go back and forth for a few days until both you and the seller reach an agreement on a fair price.

Our offer has been accepted by the seller, so what are the next steps?

In the next few days, you normally have the home inspected for defects or minor things that need to be fixed prior to your closing. We will be present at the inspection and recommend that you be there also. Once the inspection is complete, your attorney obtains a copy and the attorney review process starts. Your attorney will ask that the seller agree to make any necessary repairs prior to closing and also ask for some additional legal protections for you. Once the seller agrees to these contract changes, your second earnest money payment becomes due.

What is earnest money and do I need to provide the seller with an earnest payment?

Earnest money is needed to make your offer legally binding and also to protect the seller should you decide to back out of the contract after the home is taken off the market. The initial earnest check is $1,000 and is provided to the seller when you make your offer (this makes your offer bona fide under the law).The second payment is made when your attorney has reached an agreement with the seller, usually seven (7) days after your offer is accepted by the seller "after you are preapproved". The amount of this second installment is negotiable but the seller normally requests 5% of the purchase price (new construction may require 10%).Both earnest checks are made payable to the real estate company listing the property and is held in escrow on your behalf until the closing, when it is credited against the purchase price.

I have finalized my home purchase and submitted my loan application. What happens now?

Once the attorney review period is over and you have submitted your final earnest check and loan application, most of your work is done. The underwriters will clear your loan and ask for additional documents if needed. You should begin to make plans to move, such as hiring movers, switching utilities, and also get permission from your landlord to terminate your lease early if needed. Just prior to your closing date, we will accompany you through a final walk-through of your home to make sure all necessary repairs were made by the seller and your home is otherwise in good shape (no damage caused by movers, etc.). At the same time, we will coordinate with your attorney to review all of the closing costs involved and how much exactly you need to bring to the closing with you. Finally, you will go to the title company at your scheduled time to complete the paperwork. This usually takes a few hours so plan accordingly.

ABOUT YOUR HOME LOAN

What if I just want to see if I can obtain a loan, and for how much?

That's easy. Simply fill out the loan pre-approval questionnaire or call us directly if you prefer. Within a few minutes, we can determine the loan amount and different loan programs that are available to you. From there, we can help you with your search after a brief meeting at our office.

I have a contract on a home. When do I need to apply for a loan?
Loan Documents That I Need

Immediately. Once your offer is accepted, it is important to look at the current interest rates and programs and make some decisions.First, lenders are very busy so we need to get your loan into the system as soon as possible, especially if you plan on closing in 30 days or less. Also, interest rates are rising and it may be beneficial to lock your interest rate right away. After you decide on your loan, we need to meet with to have you sign your loan application and obtain your loan documents that will support your application (see Loan Documents You Need).

How are interest rates determined?
Rates are determined by the stock and bond market and other financial indicators. Rates generally change daily and can change several times a day in volatile markets.

Will rates fall every time the fed cuts the prime rate?
It is impossible to know when and how rates will change. Actions of the Federal Reserve Bank are only one of the economic factors that combine to affect mortgage rates.

When can I lock in an interest rate?

Once you have a real estate contract, you can "lock in" the current rate, guaranteeing that price for an agreed upon length of time, usually 30- 45 days. Before we can lock in your rate, we need a signed loan application and all the supporting documents we have asked for. Lenders are backed up, and we need time to process your loan and get a confirmation from the lender in writing (sometimes called a loan commitment) BEFORE your lock-in period and your interest rate expires. You can elect to float your interest rate by submitting your loan application without locking the rate. The risk is that the rates rise and your payments will increase sharply.

Why is it important to be "Pre-approved" rather than "Pre-qualified"?

Unlike a pre-qualification, a pre-approval involves a much more thorough verification of your current financial status. You complete an application, as if ready to purchase your home now, and we collect all necessary information and paperwork. After your are pre-approved, we will provide you with a formal approval letter assuring you that you qualify for a specified loan amount - pending appraisal of your intended property - allowing you more leverage when house hunting.

What are the major factors we look at when reviewing your loan application?

Every home loan looks at a few key aspects of your situation to determine whether you qualify and for how much.

Income Stability
Salaried income is the best way to get approved for a loan, but other income that can be verified and has a 2-year history can be used as well: investment interest, commissions, royalties, social security, disability and alimony payments. For self-employed persons, we ask for two years of signed tax returns to verify income. We will look at your adjusted gross income after deductions. If you have no verifiable income or do not have a two year history of income, there are still many loan programs that are available, including No-Doc loans. The more you put down on your home and the higher your credit score- the easier it is to obtain a No-Doc (or No Document) loan.

Debt-To-Income Ratio
We weigh your proposed housing expenses and total debt against your gross monthly income (before taxes) to determine your ability to repay a loan. Normally, the proportion of your combined debt and proposed housing expense can be no more than 36% (28% for housing and 8% for debt) of your monthly pre-tax income- although many exceptions are made if you have a high credit score.

Housing expenses usually consist of principal, interest, taxes and insurance (PITI), but can also include homeowner association dues.
Other debt may include credit card balances, student loans, car loans, installment loans and other recurring periodic expenses that appear on your credit.

Loan to Value (LTV)
Loan to value (LTV) is the ratio of your loan amount to the value of your property. This ratio tells us how much equity you will have in your home. The higher your equity and the lower your LTV, the larger your stake in the investment and the less risk there is for the lender.

Property Appraisal
This is a professional assessment of your property by a licensed appraiser to make sure that its market value is sufficient for the loan amount. A lender needs to know that the borrower's collateral (property and down payment) will cover the loan amount in case of default.

Credit History
Naturally we want to know your payment habits before giving you a large sum of money. You may be asked to explain collections, repossessions, foreclosures and bankruptcies.

It's a good idea to check your credit report before you begin the process in order to correct any errors or to improve your creditworthiness.

What are some common mistakes that people make when applying for a mortgage?

Be cautious of moving large amounts of money between accounts. Usually you are asked to verify all of your asset accounts. A loan underwriter may question large unexplained deposits or withdraws appearing on your financial statements.
Be cautious of making large purchases. Increasing your debt by financing a new purchase such as a car could prevent you from qualifying.

Make sure you continue to make payments on time to credit cards and other creditors. A late payment showing up on your credit could lower your credit score and disqualify you.

What happens after I apply for a loan?

After you apply for a loan, we send the loan application and your documents to an underwriter for approval and order an appraisal. The underwriter may ask for more documentation and we will call you regarding such requests. If you have not locked your rate yet, we will need to lock the rate prior to your closing. Once you have met the underwriter's conditions and the loan is approved, we will prepare a loan commitment letter for the seller if needed. The commitment letter may include certain conditions that you must satisfy before you can close on your loan. Finally, we will call you and your attorney prior to the closing to review your closing costs and determine the right method of payment (personal check or cashier's check).

Close your loan - The closing agent/attorney will verify that all loan conditions have been met and will explain the closing documents. You will sign the documents and receive copies for your records, submit any outstanding documents, and pay for closing costs.

What is title insurance?
Title insurance provides the lender with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred i.e. someone else may be entitled to or have an interest in the property, improvements encroach on property lines or that other similar problems may exist. The seller's attorney normally selects title insurer, though you are billed for the coverage on your closing statement.

What is mortgage insurance?
Mortgage insurance protects the lender in the event that a borrower defaults on a loan. Typically, for a conventional loan, a borrower is not required to pay mortgage insurance premiums when a down payment of 20% or more is made. For borrowers that are required to pay mortgage insurance, the monthly premium rate changes in 5% increments (in other words, you pay less mortgage insurance if you put down 15% versus 5%). To terminate mortgage insurance, you either have to refinance (after you have at least 20% equity) or wait at least two years, when you can request a waiver if you have 25% equity and you have not been late on any mortgage payments.

What is hazard/homeowner's insurance?
Hazard insurance protects homeowners against property damage and is required by lenders before you buy or refinance a home. Hazard insurance shields you against property damages and should cover the cost of rebuilding your home.

What is the difference between a cash-out and rate/term refinance?
A cash-out refinance replaces your current mortgage with a higher loan amount by using your home's equity for purposes such as consolidating debt (including paying off any second mortgage or home equity loans/lines of credit), big item purchases (such as a car, vacation or even an investment property) and to finance retirement or college.

A rate/term refinance simply lowers your interest rate, reduces the loan term or even replaces an adjustable rate loan with a fixed rate loan. Whatever the reason for refinancing, no new money is advanced on the loan.

Home | Who We Are | Our Free Services | Why Do You Need a Buyer Agent?
Home Buying Tools: Common Questions,
Mortgage Calculators, Pre-approval Questionnaire,
Chicago Neighborhood Map and Facts, Rent-vs-Own Scenario

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