Q:  Are there any special mortgage incentives for buyers/different types of buyers (first time, luxury, etc.)? – @properties agent in Evanston

Sharbel Shamoon, PERL Mortgage (SS):  Today, Welcome Home Illinois (welcomehomeillinois.gov) is a state bond program for first-time buyers, eligible veterans or homeowners purchasing in targeted areas. It has certain requirements, such as homeownership counseling and income and purchase price limits, but offers $7,500 to help with down payment and closing costs. It’s a government program, so we have to follow their guidelines to a tee. For luxury buyers, there is not much in the way of incentives, but each banking company probably has internal incentives they offer.

Q: My client is looking for a property that will need a jumbo loan, but they don’t have 20 percent down. Any options? – Realty Executives Cornerstone agent in Crystal Lake

Jennifer Sobocienski, Wintrust Mortgage (JS):  Yes, there are options to do less than 20 percent down, but it does depend on the purchase price and loan amount. Lenders have the ability to do a first and second mortgage with as little as 10 percent down, and also the ability to do one loan with mortgage insurance. I would have to discuss which option is best for the client based on their individual situation. 

Q: Why can’t the credit we negotiated be allowed by the bank? – Coldwell Banker agent in Hinsdale

Dan Pagano, Fifth Third Bank (DP): Because appraisal standards as dictated by Fannie Mae (and the Fannie Mae 1004 form used by all appraisers) insist the appraiser must always address financing and sales concessions, the appraiser can only put this concession on if it is written in the contract or a contract addendum. If the contract doesn’t have this pivotal information, it cannot go on the appraisal and therefore cannot be reflected in the transaction at all. The real issue is, most lenders don’t realize or make it a part of their Realtor partnerships to discuss this, and many of these concessions are “day two” renegotiation items after a property inspection.

Q: Are closing fees negotiable? What about title costs? – Century 21 agent in Addison

SS: Yes, depending on the loan program the borrower decides to go with, they can negotiate and obtain lower fees or obtain a lender credit to absorb those fees. However, there is always a direct correlation between the final interest rate and the closing fees. In order to secure the best available rate, buyers will typically incur fees. Alternatively, they can always take a slightly higher rate and the lender can credit most or all of their fees. Buyers must know their goals for the property in order to choose the best blend between low rate and low closing costs.

When it comes to title costs, the seller’s attorney typically picks the title company, so the buyer really has little opportunity to negotiate the fee. The title company charges both the buyer and the seller, and the buyer usually isn’t even aware of any options. Buyers can ask their attorney to inquire about junk fees on the seller’s title invoice – this is a trick that can sometimes saves some cash. Now, two years ago, the law changed to where buyers can choose their own title; however, this will not decrease the buyer’s cost because every title company has a rate card that is not negotiable. Buyers are often better off not choosing their own title company simply because, in most cases, it will cost them more money.

Q: How easy/quick is the pre-approval process? Many times buyers are eager to get out and start shopping, but agents need to understand the buyer’s qualifications beforehand. Can a loan officer give me some sort of indication as to the buyer’s credit worthiness in a relatively quick time frame, even if it’s just a basic review of income and credit score/report?  – RE/MAX Signature agent in Chicago

Michelle Otte, BMO Harris Bank (MO): There are two processes that can address this. The first is prequalification, which can be done on the spot during an appointment with the client. The lender gets accurate application information, credit is pulled and reviewed, and automated underwriting will give an indication of whether or not the borrower is qualified for the proposed loan amount/payments they are looking for.

The second is taking the prequalification process to pre-approval, which is gathering all the required documents for a loan review and having an underwriter provide a decision. This process takes a bit longer, typically a week, because it does go through the underwriting process. Generally, it’s best to use this on more complicated situations to ensure the borrower is qualified. Pre-approvals are important, so getting it to the client in a timely manner is the goal.