REAL ESTATE TRANSACTIONS

PART 1: THE ATTORNEY REVIEW WITH HOME INSPECTIONS AND POSSIBLE CREDITS

Once the offer is accepted by the seller and the contract is signed, the attorney review period of the contract begins. At the same time, the “earnest money,” will be paid to the seller's attorney or broker. This is a deposit which is refundable under certain circumstances if the deal falls through.

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The buyer now has a chance to perform an inspection and ask for possible credits at closing. The inspections will need to be completed by a certain date, and an attorney review correspondence will need to be prepared. The inspection will generally be done by a licensed contractor. The buyer will typically receive a written report from the inspector.

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The next step will depend on the results of the inspection. If there are no major issues, the buyer and seller can move forward. However, if the inspections reveal issues with the home, the buyer can request repairs or closing-cost credits through the attorney review correspondence. The sellers can then respond to these requests.

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The sellers have several options once this happens. They can either agree to all the buyer’s credit requests, offer a modified credit or repair option, or decline the buyer’s requests entirely. In response, the buyer can accept, continue with negotiations, or leave the deal without any financial penalty, so long as it is done within the attorney review and inspection period.

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The buyer also has a chance to negotiate a home warranty with the seller, which can cover a variety of items, depending on the issues and willingness of the parties.

PART 2: SECURING THE MORTGAGE LOAN FOR BUYING A HOME IN ILLINOIS

Most people buying a home in Illinois will need a mortgage loan. Securing the loan can be one of the most complicated and detailed phases of the entire home buying process. Therefore, it’s best to find a qualified mortgage broker and start the process as early as possible.

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When buying a home and taking out a mortgage in Illinois, these are some of the basic steps:

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The first step will be to submit a mortgage-loan application to your lender. You can do this through your broker or directly to the lender. After around three days, you will receive a GFE, for “Good Faith Estimate.” This is a breakdown of the estimated costs for closing on the loan, and may vary slightly from the final price at closing.

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As with the pre-approval for your home loan, with the mortgage application , you will have to submit multiple documents related to your credit, income, and debts, such as:

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• Several months’ worth of bank statements, including any and all accounts that you currently own.

• Information regarding all outstanding loans, lines of credit, or any other financial liabilities,

• Two years’ worth of tax returns

• Two months worth of recent pay stubs and any contact information from the employer.

• Any other additional information related to your overall financial situation. This can include anything that increases or reduces your monthly expenditures. For example, if you pay or receive child support or divorce alimony.

• Be prepared to provide an explanation of any recent credit inquiries

• Be prepared to provide information related to large deposits, especially any gifts. While gifts are great for funding a down payment or closing costs, they present difficulties for lenders and will require some sort of written explanation. Your lender will provide you with more details on what is necessary.

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The lender will eventually give you a decision on whether your loan is approved. If you are approved for the mortgage loan, you will be issued a commitment letter. These commitment letters will often have certain conditions which need to be met. Such conditions can include an appraisal so the lender can confirm the value of the property, as well as a requirement that no material changes are made to your financial situation.

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The financing contingency will be removed by the buyer before the loan-contingency date, which is defined in the contract. The buyer may ask the seller for an extension to their loan contingency if they have not yet received their letter.

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The lender or mortgage broker will also order an appraisal on the property. The lender or mortgage broker cannot request an appraiser of the their choice. However, a different appraisal may be requested if the first one does not meet their needs.

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If the appraisal comes in too low, the lender will likely decline to issue the loan unless a change is made, such as modification to the home or a reduction in the sale price.

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The buyer will also need to purchase homeowner’s insurance. In the case of a condominium purchase, the majority of the cost for this insurance is already including within the HOA dues, with only a smaller policy bought by the buyer.

PART 3: THE CLOSING PROCESS IN ILLINOIS

The closing process will take place at a single table where all parties will sign the appropriate documents. This location is usually at the office of the title company. Once all the documents have been signed, buyers will be able to take possession of the home.

While the closing itself typically takes only a few hours and is faster than most other phases, there are some steps to remember, including:

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• The seller’s attorney or title agent will typically carry out a title search before the closing to make sure there are no liens or assessments against the property. Assuming the title is clear, the closing can proceed as planned. The buyer can ask for the title search in advance of closing the deal; if the search reveals any issues, they can request changes to the price or the contract itself. The seller will provide a title commitment on the property.

• Basically, a title commitment is a document where the title insurer discloses to all parties connected with a particular real estate deal the liens, defects, and burdens and obligations that affect the subject property. It further lists all requirements that must be met before a title company can insure a title as “marketable” or a loan as having a certain priority.

• Once the mortgage contingency is satisfied and conditions are met, a final closing date can be scheduled. A cash figure for the buyer to bring to closing is calculated. This is the amount the buyer will need to wire to the title company on the day of closing. It is based on the down payment, mortgage closing costs, as well as property taxes, escrow and other figures.

• Usually, on the day before or the morning of closing, a final walkthrough of the property is scheduled. This is performed to verify the condition of the property and also to verify that the seller has made any repairs they were supposed to pursuant to the attorney review and inspection contingency.

• At closing, the buyer and seller will sign the appropriate documents for transferring ownership. Following closing the title company will record the deed and mortgage with the county’s recorder’s office.

Buying or selling a home is one of the biggest financial decisions someone can make. Wachnik Law LLC will guide your through this complex process. Call Wachnik Law LLC today at 847-892-5060 for a free consultation.