Should I Talk to a Realtor or Mortgage Broker First?

There are several vital professionals you will require in order to find a home you want to buy, apply for a home loan, and purchase it. Most people are not sure whether they should talk to a realtor or mortgage broker first. To help you decide, let’s look at the pros and cons below.

Realtor First?

If you like hitting up open houses to get a feel of current homes in your area, you will Mortgage Broker vs Realtorencounter a realtor first, and this okay. Just keep in mind, the realtor you meet is the seller’s agent and is there to sell the home.

At some point, you will need your own realtor to act as your buyer’s agent. After an initial consultation to determine your needs, they will almost always request you sign a contract, typically for a 6-month period, during which time you cannot enlist the services of another realtor until your contract expires.

Pros

  • Lets you find out what types of homes are currently available on the market and their price ranges.
  • Helps you determine whether you have saved up a large enough down payment.

Cons

  • You and your realtor do not have an accurate picture of how much home you can afford.
  • You could be wasting time looking at properties outside of your price range.

Mortgage Broker First?

Ideally, you will want to contact a mortgage broker first, before finding a realtor. Purchasing a home is a major purchase and involves your personal finances. Your broker is a valuable resource of information to learn more about the processes of buying a home, including appraisals, closing costs, points, and so on.

Pros

  • You can get pre-approved or pre-authorized for your mortgage. Pre-approvals give you an estimate of how much home you can afford. Pre-authorizations provide you a dollar amount to work with while shopping for your new home.
  • You learn about the different rules regarding the different costs of buying a home. Your broker will explain various rules in the real estate and mortgage industries. For instance, you cannot borrow money and use this for your down payment, yet you can use monetary gifts, as long as they are documented, for the down payment.
  • You will have a solid mortgage team in place ahead of time. Home buyers that put this process off until later tend to run into issues when it comes time to obtain financing.

Cons

There are really no cons to speaking with a mortgage broker first. They will help save you time shopping for your new home because you will know:

  • How much home you can afford. Buying a Home in Chicago
  • How large of a down payment you will need.
  • An estimate of your closing costs.
  • An estimate of other related costs, like inspections.
  • Different loan program options.

To learn more about mortgage processes, including getting pre-approved, please feel free to contact A and N Mortgage at (773) 305-LOAN (773-305-5626) to speak with one of our Chicago mortgage brokers today!

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Tips and Tricks on How to Buy a Home in a Hurry

Buying a home is a journey, but sometimes you can’t afford to patiently see it through. What do buyers do when they’re relocating or need to be out before their lease is up?  We’ll teach you great shortcuts like getting preapproved by a Chicago mortgage broker like A and N Mortgage, We’ll give you a few tips and tricks to get through the process in a hurry!

Take Care to Make Informed Decisions

With speed comes much room for error. When you have to move forward quickly due to outside forces like a lease expiring or relocation, you may make decisions on the fly without weighing all of the facts. While speed might be necessary, don’t forget to ask questions. Do your research before jumping in with both feet. Take a moment to fully think through the potential consequences before moving forward.

Get Pre-Approved

If you’re in a hurry, then you’ll want to start your home search by getting a pre-approval. Keep in mind that this is not the same thing as being prequalified. Preapproval means you will need to provide information such as W2s, bank statements, and debt information. Getting through this part of the process prior to searching for a home will allow you to move forward much more rapidly once you find the home that’s right for you.

Not only will pre-approval help you buy a home in a hurry, it will also increase the chances of the homeowners accepting your bid. Pre-approval means that you’re a serious buyer and will reduce the number of issues that could delay the buying process. The best part is you can often apply for a home loan online to get the pre-approval process started quickly.

Know What You Want

Indecision can halt the home buying process in its tracks. Create a list of features that are must-haves in a home. Then figure out the wish list items you could sacrifice if it hindered your search. Knowing what you want up front will help both you and your realtor search for and, ultimately, select a home.

Real Estate Agents—Sometimes You Need More Than One

When you’re in a time crunch, you’ll want to have multiple people on your side. This is doubly true of real estate agents. Generally, people only utilize one, but putting together a team can help you cover a larger search area more quickly. Plus, they can pool their expertise to find houses that are on par with your requirements.

Line Up Your Experts

Another way to save time is to line up your experts before you need them. Talk with your real estate agent and friends and search internet reviews. Choose qualified home inspectors, lawyers, and other experts you may need. Call them to see if their schedules will be open to accommodating your needs. If they’re all ready to go, you’ll save time finding an expert you can trust who has time to help you.

Be Flexible

If you need to buy a house in a hurry, know that you may have to give some things up. Often, real estate contracts are built on contingencies such as buying the home after repairs have been completed. This takes time, and a seller may want to negotiate on these terms. The negotiation process can take time as you and the seller both decide on what you find acceptable.

When you’re looking at houses, keep an eye on what may need to be repaired and think about how important it is to you. It may be better to bid lower and have your bid rejected then get stuck in a contract process that moves slowly due to repairs.

At the end of the day, know that hurrying through buying a home can be dangerous. You may make rash or uninformed decisions. You may settle for a house rather than finding the one that’s right for you. So, take as much time as you can instead of just throwing caution to the wind.  Remember, no matter what you do, processes can stall and take more time than you’d like.

To learn more about how to prequalify for a home loan with A and N Mortgage, call us at 773-305-5626!

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Do You Know How Much Home Can You Afford Before You Apply for a Home Loan?

Many people are often disappointed when they discover they cannot afford as much home as they initially believed after they apply for a home loan to get qualified for a mortgage. How Much Can You Afford When Applying for a HomeNot to mention, by this point, they have already spent countless hours shopping for homes they thought were in their price range and may have even made a purchase offer without realizing they were stretching themselves too thin.

Before you even start looking at home listings and houses for sale in your area, it is in your best interest to sit down and figure out approximately how much home you can afford. Knowing this information is not only beneficial for your realtor, as it lets them know what price range of homes for sale to show you, but, also, it saves you time because you will not be considering houses outside of your price range.

How to Calculate Ratios Used by Lenders

There are several different types of ratios used by mortgage lenders as a general guide, and there are exceptions. Understanding these ratios will give you a better idea of the price range of homes for which you should be shopping.

Debt-to-Income

This ratio is the total amount spent on ALL debt payments, including housing, credit cards, car loans, student loans, utilities, and so on. It is calculated by taking your gross monthly income before deductions and the total amount of all your monthly debts.

To illustrate, you and your spouse have a combined monthly income of $15,000 and a total of $5,000 in debt payments. You would take $5,000 and divide it by $15,000 to calculate the debt-to-income ratio and, in this example, this would be equal to 0.3333, or 33.33%.

Front-End

This ratio is sometimes referred to as the housing ratio, and it focuses entirely on your monthly housing costs, which should not exceed 28% of your gross income. Going back to our example, 28% of $15,000 is $4,200 ($15,000 x 0.28). The front-end ratio can be misleading because it does not account for your other monthly debts, so it should never be used by itself.

Back-End

This ratio is similar to the debt-to-income ratio and is calculated the same way, but it should also include property taxes, house insurance, and homeowner’s fees as part of your monthly debts. Mortgage lenders like to see a ratio percentage around 36% or less.

How Strict Are Mortgage Companies/Lenders When It Comes to Ratios?

Most lenders use the above ratios as a guide, and there are always exceptions, depending Mortgage Programs for the Militaryon other factors like the amount of your down payment, your credit history, and so on. For instance, FHA and VA loans are what lenders considered “well-documented loans,” and their ratios are used for first time home buyer pre-approval.

These mortgage programs have certain federal regulations and protections, so lenders are willing to consider a higher back-end ratio of around 43% and sometimes will even go as high as 50%. In addition, there are also special types of home loan programs for people with high debt-to-income ratios for which you may qualify, too.

Other Considerations to Take into Account

Calculating the above ratios gives you a good starting point to determine how much your monthly housing payments could be—but not always the actual purchase price of the home. You need to be careful to remember there are other considerations you need to also take into account to ensure you do not over extend yourself and find yourself facing a financial crisis.

Down Payment

The amount of your down payment is an important factor in determining how much home you can afford. The larger the down payment, the smaller amount you need to borrow, so you could potentially afford more home—but this may not always be the best choice for you.

Economic Changes

If the cost of electricity, food, and gasoline were to all increase, would you still be able to afford your monthly housing expenses (i.e., house payment, taxes, insurance, etc.)? Many people were over-extended when the housing crisis hit, a decade ago, and they could not adjust to increases in other monthly expenses.

Lifestyle Influences

Do you like dining out several times a week or making weekly trips to the spa? Your Mortgage Lifestyle Changesspending habits beyond your monthly expenses need to be considered before committing to a home loan. Once you buy a house, you may have to cut back on these lifestyle expenses to make ends meet. If you are not ready to this, then it is okay to wait or consider a less expensive home.

Evaluate All Mortgage Program Options

Sometimes a conventional loan is not your best choice, and there could be special first-time buyers programs, government programs, or others that could offer you a better interest rate, a lower down payment, and other perks which can make qualifying for a loan easier.

Don’t Forget Maintenance Costs

Last, remember: You will have added maintenance and upkeep costs after you buy your home, so you may want to look at homes that cost less and leave a little extra you can set aside to cover these expenses.

For assistance in finding the best home loan program or help calculating how much home you can easily afford, do not hesitate to contact A and N Mortgage at (773) 305-LOAN (773-305-5626) to speak with one of our experienced Chicago mortgage brokers today!

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What to Look for in a Potential Home for Expecting Parents

You’ve learned you’re expecting a child. The registry is set up and everything is in order, or is it? You look around your current home and realize it’s just not the place you see this child growing up in. That’s when you decide you should start looking for a new home for your family. Before you consult a Chicago mortgage broker like A and N Mortgage, there are a few things you should look for in your potential new home.

Factor in New Budget Constraints

You have a carefully laid out budget and a healthy savings account, but have you What To Look For in a Home for Expecting Parentscontemplated the changes a baby will bring to your budget? Regardless of whether or not you already have children, adding one to the mix will add a significant expense to your monthly budget. You’ll have diapers and other supplies to buy. If you’re going back to work, you’ll have to pay daycare costs too.

Sit down and write out a new budget, even if you’ve already created one previously. Be honest with yourself about what additional costs you’ll have with the new baby. This new estimate will help you gauge how much you can allot to a monthly mortgage payment. This is great to do before you start looking, so that you can look at houses in a realistic price range.

 

Carefully Weigh Layout

Layout is very important for many parents of small children. Ponder whether or not you’re okay with stairs. Don’t forget they accommodate a baby gate. Would you like an eat-in kitchen, or do you prefer a formal dining room? Is a playroom a must-have? Then there are the bedrooms. Reflect on how many children you may want to have and how many bedrooms you’ll need. Perhaps you have relatives who live far away and will need a place to stay when they visit.

How does your dream home meet up with the reality of a sick child at 4 a.m.? Running up the stairs to get to a baby every time they cry may not be ideal for you. An open kitchen may be key so that you can keep an eye on the little ones while preparing dinner. Layout may not seem like a big deal, but sometimes the devil is in the details.

 

Location Is Everything

The real estate mantra is “location, location, location,” and it really is true. Your neighborhood will be important to your family. It’s more than just being safe, but is it walkable? Are there other kids to play with in the neighborhood? What’s nearby? A park or playground is certainly a plus.

What other things are important to you? With a small child, you’ll want a grocery store and pharmacy close by just in case you need to grab something in an emergency. Other nice-to-haves might be a public library or a bowling alley. Think about the things you do every day and what will make your life easy and stress-free.

 

Schools and Children’s Programs

Last, you may not be thinking about this just yet but schools are important. When Buying a Home Near a Good Schoolwinnowing down possible locations, school ratings need to be factored in. Look for well-rated schools that have great reputations. Ask for advice from friends and relatives and check out forums.

It’s advisable to fully vet neighborhoods’ and cities’ school offerings prior to viewing homes, since as your children grow up it’ll be an integral part of their childhood experience. In the future, you’ll be happy you found the best schools for your children.

Not only are schools important but so are other educational opportunities. Cities that offer a wide variety of education programs and recreational activities outside of the school day will give your kids something to do no matter what time of the day or year it may be. Knowing your kids will have plenty of fun activities to choose from will set your mind at easy as they grow up.

Now that you know your priorities, the next steps are to find a real estate agent you can trust and obtain a mortgage prequalification.

To learn more about how to prequalify for a home loan or to get information on a residential mortgage, call us at 773-305-5626!

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What Happens If You Die Without a Will?

Illinois Intestacy Laws: Find out what happens to your estate if you die without a will in Dying Without a Willthe state of Illinois.

Throughout life, you may be thoroughly responsible with your finances. From investing money to applying for home loans with favorable interest rates, you carefully research options and save money to help benefit your family’s future. However, many people delay or overlook creating a will. Dying without a will creates unnecessary complications for loved ones. A will gives you control over where your assets go, and without a will, you simply relinquish this control to the state where you live. Your beneficiaries may also lose out on important tax benefits.

Dying Without a Will

If you die without a will, it means you have died “intestate.” The exact intestacy laws of your state will ultimately determine how the contents of your estate are divided. Real estate owned in a different state will be handled by the intestacy laws of that particular state. These laws differ, depending on whether you are single, married, and/or have children when you die.

In Illinois, this specifically means:

Survived by a Spouse, No Children/Descendants

Your spouse will receive your entire estate.

Survived by a Spouse and Descendants

Your spouse will automatically receive half of your estate, and the remaining half will be split among your children or other descendants, per stirpes.

  • “Per stirpes” means that your beneficiaries inherit a share of your estate equal to the individual they are representing. For example, if you have two children and a spouse, your spouse will receive half of your estate and your children will each receive a fourth of your estate. However, if one child dies before you, their portion of your estate will be divided among their children (your grandchildren) equally.

Survived by Descendants, No Spouse

Your descendants will split your estate equally, also per stirpes.

No Surviving Spouse or Descendants

Your parents and siblings will divide your estate equally. If one parent dies before you, your surviving parent will receive double the amount. If a sibling dies before you, their descendants will split your deceased sibling’s share, per stirpes.

If you do not have any surviving parents, siblings, or descendants of siblings (nieces, nephews, etc.), half of your estate will be divided among your paternal family and half of your estate will be divided among your maternal family.

If you have no known family members, the State of Illinois will receive your estate.

Contact A and N Mortgage today at 773-305-LOAN to reach the best mortgage brokers in Chicago and save money on residential mortgage loans.

 

 Source

  • https://www.thebalance.com/per-stirpes-definition-in-wills-3505583
  • https://www.fourstarlaw.com/

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Tips and Tricks for Saving on Property Taxes

If you’re ready to apply for a home loan, it’s essential to make sure your payments will still be affordable with property taxes included in the mix. These payments can be extremely burdensome, especially if you have an FHA mortgage and pay them on a monthly basis. However, with a little insight, you can drastically reduce your bill and make it that much easier come tax time.

Consider a Homeowner’s Exemption

In Cook County, many residents are eligible for what’s known as a Homeowner Exemption Tips and Tricks for Saving on Property Taxeson their property taxes. Unfortunately, many people are not aware of this program and fail to take advantage of it. If you own one of the following, chances are you’ll be able to save between $250 to $2,000 per year:

  • Single-family home
  • Townhouse
  • Condominium
  • Co-op
  • Apartment building up to six units

The only other qualification is that you’ve occupied the property in question as of January 1. Once you apply successfully, the Assessor’s Office will automatically renew your exemption each year, allowing you to keep saving without any more work.

Appeal Your Property’s Assessed Value

Another method of paying less is to appeal the assessed value of your home. Less than five percent of people nationwide take the time to appeal their home’s value despite the fact that an estimated 30 to 60 percent of homes are over-assessed in value.

Look at Comparables

Often, the assessment will include comparable homes in your neighborhood. Check these to see how they really match up to yours. For example, if your home is valued at $300,000 and has two bedrooms, but your neighbor’s home has four bedrooms and is valued at $200,000, chances are there’s been an error in the calculation process.

Study Your Property Tax Card

Your property tax card contains all of the information the government has on your residence. It will include things like your lot size, number of rooms, or any renovations you’ve completed. Because the Assessor’s Office has so many properties to manage, mistakes can often be made. Always check to make sure your property is listed correctly in all aspects.

Meet the Deadline

The time of year you receive your assessment notice varies depending on the township you live in. However, keep in mind that you typically have about a month upon receiving it to make a case. Research the deadlines for your specific area and make sure you send in your appeal before then.

Limit Add-ons and Curb Appeal

Quite obviously, the more you upgrade your home, the higher your property assessment and taxes will rise. Since new structures such as pools, decks, or sheds all have to be approved by your local building departments, there’s no way to sneakily add-on to your home without the assessor finding out.

However, if you must add on, try to limit the curb appeal of your home. The assessor often bases their evaluation based on the aesthetical outward appearance of the property, so less beautiful properties will be assessed for less.

Looking for more ways to save on your property taxes? Give mortgage brokers A and N Mortgage a call today at 773-305-5626. As a Chicago mortgage broker, we can help you better understand Illinois regulations so you can keep your wallet happy.

Source

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First Home? A Purchase Now Could Beat a Bigger Down Payment Later

Waiting until you’ve saved enough for a large down payment could be a good move in some aspects. However, buying a home now could put you ahead in a few ways. Be sure to calculate the interplay of all factors. These include your credit standing, your current (and future) monthly rental payments, your rate of savings, and the price of a home you’re likely to buy. Find out how these factors interact, and you can make the best overall decision.

What are the likely effects of investing in a purchase now versus holding out until you build up more in savings? The answers may surprise you. Those rent payments are going to add up while you wait. And rent payments build no equity.

An FHA Loan Could Be Right for You

A loan insured by the Federal Housing Administration will give you a fixed interest rate. Locking in the current rate can be a smart investment.

Unlike most conventional loans, a loan insured by the FHA is assumable. If you finance the purchase of your new home with an FHA-insured loan and need to sell a few years later, you can offer the next buyer the option of taking on your FHA loan. Depending on the prospective buyer’s circumstances, this can be a significant attraction to a prospective buyer.

Make Your Retirement Account an Early Hero

Do not overlook your individual retirement account (IRA) in your financial planning. But what about the early withdrawal penalty?

Remember, for the first $10,000 you remove from a traditional IRA, the early withdrawal penalty can be waived. Internal Revenue Code Section 72(t)(2)(F) permits you to apply for the waiver. A relative, such as your spouse or your parent, can also qualify for that exemption when helping you make the purchase. It’s prudent to check with your tax advisor on how the tax code works for first-time home buyers.

Additionally, important tax deductions are available when you become a homeowner.

We’re Standing by to Assist You

If you’ve been waiting to increase your savings before buying your first home, you might be surprised at the benefits of buying now. Home ownership is a feeling like no other. And making the move sooner rather than later could spare you thousands of dollars in rent payments. Buying means building equity for your future.

To get an overview of tax and other factors, our mortgage calculator tools will help get you oriented. And consult our mortgage tips for loan and relocation advice and support.

Ready to apply for a home loan? Get a home loan pre approval with our online mortgage application.

We encourage you to contact A and N Mortgage with any questions you have. We take pride in giving our customers the reliable and proper guidance they will need in financing their first home.

External sources:

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Living in Chicago: The Best Decision You’ve Ever Made

Chicago is located centrally in the Midwest with access to the rest of the world by way of Chicago O’Hare, but, it has so much to offer you never have to leave. Offering everything from nature to culture to affordable Midwestern living, Chicago is a great place for anyone to call home. Anyone who is thinking about making the move could ask Chicago mortgage companies what the Midwest has to offer.

Here are some of the best things Chicago has to offer:

  1. Water –Chicago has a gorgeous, recognizable skyline, with skyscrapers proudly Living in Chicagoemphasizing the waters of Lake Michigan. Another view of the skyline is at stunning Montrose Harbor. The shore goes on so long, bordered by beautiful Lakeshore Drive, that it feels more like the city is near an ocean. The Kathy Osterman Beach is a real beach known for being peaceful, relaxing and less busy than other big city beaches. For a relaxing ride, you can pay $3 and float along the Chicago River on a water taxi from the Loop to Chinatown.
  2. Art and Culture –The Art Institute is one of the best, oldest and largest art museums in the United States, keeping such treasures as original works by Pablo Picasso, George Seurat, and Grant Wood’s American Gothic. Even the Harold Washington Library, which is the main public library, is known for both its collection and the amazing architecture of the building. Many structures and buildings in Chicago are famous for their unusual and beautiful architecture, including The John Hancock Building and Buckingham Fountain. The Sears Tower, now known as The Willis Tower, is 108 stories and allows tourists to go to the top to get a Chicago view.
  3. Science museums –These are the kinds of museums which are as interesting to an adult as to a child, and they are one of the reasons Chicago is such a terrific place to raise a family. The Chicago Nature Museum offers workshops and classes, not just exhibits to look at. Shedd Aquarium advertises 32,000 amazing animals with more hands-on activities. There are several more, but The Museum of Science and Industry is very popular and has everything from a coal mine to a model railroad to a German submarine.
  4. Sports– Do you like hockey? Check, Chicago has the Blackhawks. Do you like basketball? Check, Chicago has the Bulls. Do you like baseball? You may have heard the Chicago Cubs won the World Series last year.
  5. People – The people in the Midwest are friendly and open, like most Midwesterners. This is one of the ways you can get the advantages of a big city without sacrificing something which is more common in smaller towns. People in Chicago will have a conversation with a stranger and be happy about it.
  6. Home Affordability – Homes are more affordable than in much of the rest of the country, even though Chicago is a big city. But even though the price is smaller, you’ll still get more for your money so you’ll have room for that family you want to raise surrounded by art, culture and festivals. A Chicago loan brokercan get pre-approval for first-time home buyers to make the process convenient and easy, and offer potentially better rates.Moving to Chicago would be the best thing anyone could do. The city offers everything anyone could want, including four seasons in the year. With Online Mortgage Pre-Approval, you can prequalify for a home loan so you can get started finding the best home as soon as possible. At A and N Mortgage, we are a Chicago Mortgage Broker that can offer First-Time Home Buyer Pre-Approval. Call us to find out more about our services at 1-773-305-5626.

     

    Sources

  7. http://tourist2townie.com/culture-food/7-reasons-why-chicago-is-the-greatest-city-in-america/
  8. http://www.chicagotribune.com/tic_realestate_buying_besttime-story.html
  9. https://www.buzzfeed.com/jonmichaelpoff/reasons-chicago-is-the-greatest-city-in-the-world?utm_term=.fuDOnrGoZ#.gpNLAbowM
  10. http://grownuptravelguide.com/chicago-best-city-in-usa
  11. http://livability.com/il/chicago/attractions/11-reasons-why-chicago-is-an-amazing-place-to-live

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How to Compute Real Estate Tax Proration and Tax Credits

Tax proration refers to the allocation or dividing of certain money items in the settlement sheet for real estate property transfer. An attorney, professional real estate salesperson, or mortgage broker Chicago performs the proration calculations at the closing and determines what amount of property taxes each party (seller and buyer) is supposed to pay. The seller of the property is supposed to pay taxes from New Year’s Day up to the date of the transfer. The buyer then assumes responsibility for the tax payments from the date of the transfer onwards.

Most items are easy to prorate and assign the calculated amounts to the buyer and seller in a real estate transaction. However, property taxes sometimes pose a change in the calculations because they tend to change from one fiscal year to the other without notice. The settlement statements can be lengthy and include itemization amounts, particularly those proration amounts affecting both the buyer and seller.

Before we look at an example of how a real estate tax proration calculator or calculation is done, here are just a few steps that help summarize the whole process for easier understanding;

  1. When computing tax proration, you start by determining the real estate taxes for the property during that year. The seller should produce a copy of the tax bill.
  2. They should then determine/calculate the number of days that the seller has owned the home during the property tax year, excluding the sale date.
  3. Divide the number of days you get from step 2 with 365 (total number of days in a year) in order to get the percentage of days during which the seller still owned the home during the property tax year.
  4. Take the percentage from step 3 and multiply it with the total property tax bill. The amount you get is what the seller should have paid in property taxes. If he has not yet paid this amount, the seller must reimburse you for the difference between what he is required to pay and what he has actually paid.
  5. Subtract the figure you get in step 4 from the total property tax bill and the difference is the prorated amount you are required to pay at closing as the buyer.

Note: As a buyer if you are itemizing deductions, you can claim tax credits for all the prorated tax amount on the property even if you were not required to reimburse the seller for the property tax already paid. Also, make sure to keep the closing statement safe because it may be required in the future as evidence that you paid your share of the property taxes.

Now let’s look at how to compute real estate tax proration in Chicago;

An in important point to note before beginning this computation is that the tax collections in the State of Illinois are set back one year. This is as a result of the one year property tax holiday granted by the State of Illinois during the Great Depression of the 1930’s.

Computation example;

Let’s assume that the tax bill provided by the seller for the first half of 2015 (Jan 1, 2015 to June 30, 2015) is $2,000. Because the bill is delivered almost a year after the period when the tax was incurred, the taxpayer does not know what his tax bill will be when property tax is actually being incurred. Therefore, he can only approximate his bill based on the previous tax bills.

So how does that apply?

When you buy some residential real estate property in Chicago, maybe with the help of a mortgage company, clear title is provided and all taxes that can be paid on it are paid up on the closing day. However, because we have mentioned that tax bills come out one year later after they are due, there will be an entire year of property tax liability that is unpaid and its actual bill unknown!

Here is how to go about the calculations;

If you make an offer to purchase a home in Chicago and the offer is accepted on June 1, 2016, considering that the closing date is September 30, 2016 and the full year tax bill for 2014 is $4000;

  • We will first calculate the estimated tax liability up to the closing date;

1st half of 2015 tax bill is $2200 (must be 55% of the full bill from the prior year i.e. 55% X 4000)

2nd Half of 2015 tax bill (unknown)
1st Half of 2016 tax bill (unknown)
Partial 2nd Half of 2016 tax bill (unknown)

The contract should call for a proration premium which is typically 105% or more. In this contract, the amount is 105%.

  • We then estimate the 2015 full year tax bill by simply multiplying the 2014 bill with 105%

$4000 X 1.05 = $4200

To find the amount for 2nd half of 2015:

We take $4200 (total estimated 2015 bill) and less the $2200 already paid for a credit of $2000 to be given at closing for this half.

  • To figure out our estimated 2016 full year bill, we simply multiply the 2014 bill with 105%.

$4000 X 1.05 = $4200.

For 2016, you will be paying half of the $4200 for the period 1/1/2016 to 6/30/2016 i.e. $2100

For the period 7/1/2016 to 9/30/2016 you would pay the fraction of;

((31+31+30)/365) x $4200 =$1058.64.

  • So, our closing statement will show the following credits;

2015 taxes 1st half: Paid
2015 2nd Half Credit: $2000.00
2016 1st Half Credit: $2100.00
2016 2nd Half Credit to 9/30/2016: $1058.64.

NB: In case you do not have a full year tax bill available and must create a base tax amount from scratch, consult your mortgage broker Chicago for advice. Normally, new homes that have no tax records yet in Chicago use 2% of the purchase price for computation because it is the approximate annual maximum tax rate in the city.

There may be many Chicago mortgage companies at your choice, but none of them delivers like A and N mortgage! We offer you all the relevant advice relating to your home purchase for a smooth transaction process. Call us today for consultation at 312-793-3000 and ask any questions you may have about tax proration and tax credits.

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Received a Tax Bill and Not Sure What to Do with It?

You pick up the mail one day and, suddenly, you see it: the dreaded property tax bill. Unfortunately, taxes stress you out, and you’re not really certain what, if anything, you’re supposed to do with it. Fear not! In this post, we’ll discuss what steps you should take to resolve your confusion and get your tax bill paid on time.

Did You Escrow Your Taxes with Your Mortgage?

If you’re not familiar with the term “escrow,” it refers to the holding of funds by your Received a Tax Bill and Not Sure What to Do with Itmortgage lender specifically for the use of paying taxes and/or insurance each year. This way, rather than dealing with multiple mortgages, tax, and insurance bills, everything is rolled into one total and split across your monthly mortgage payments.

One of the benefits of this is that you don’t have to worry about paying your property taxes manually each year. Instead, your mortgage lender will automatically make a payment from your escrow account. Only if your taxes were previously underestimated will you need to pay any additional money. If it turns out that you’ve overpaid, your lender will usually send you a check for the excess.

If you did escrow your taxes, take the following steps to deal with your tax bill:

  1. Send a copy of the tax bill you received to your mortgage lender.
  2. Take a look at the escrow balance and note how much is currently in your escrow. The following month, check the balance.
  3. Confirm that new balance shows that the amount of the tax bill has been subtracted from your previous escrow balance.

If you did not escrow your taxes with your mortgage payment, there is only one step:

  1. Pay your tax bill in full per the instructions provided on the bill.

If you’re not certain whether you escrowed your taxes with your mortgage payment, take the following steps to confirm:

  1. Take a look at your last mortgage statement and look for anything showing an escrow account.
  2. If you do see an escrow account, check to see if you are escrowing for taxes and insurance.
  3. If you do not see an escrow account, it is probable that you did not escrow your taxes with your mortgage payment.
  4. If you’re still not sure after looking at your mortgage statement, call your lender and talk to one of their mortgage professionals to help you determine whether your taxes will be paid by escrow or by you separately.

Make Home Finances Easy with A and N Mortgage

Make your mortgage and escrow process a snap by borrowing with A and N Mortgage. From application to funding, all of our services are managed under one roof, making for a streamlined loan process and quick turnarounds and a great customer experience.

To learn more about our lending services and exceptional rates or to get pre-qualified for a home loan, contact our friendly staff today at (773) 305-LOAN.

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