Buying your first condo in Chicago should be a fun experience, but it can also be scary and stressful too if you’re not fully prepared and put yourself in the best possible position when it comes time to make some serious decisions. So if you’re planning to be in the market for a new home or condo and also happen to be a first-time home buyer, here’s our shortlist of missteps to avoid.
Start shopping for a condo before you’ve applied for a mortgage
We get it—looking around at available condos for sale is exciting and probably the most enjoyable part of the whole home buyer process. But if you aren’t already pre-approved, chances are other buyers will be and you’ll ultimately miss out on what could be your dream place. Plus, you never really know how much you can afford (or how much you’re approved for) until you apply, so do yourself a favor and start on the mortgage side of things.
Talk to only one lender
While we’re on the subject of applying for a mortgage, also be sure to shop around and talk to several different lenders. We recommend talking with at least three different lenders, which should help in comparing rates, fees, and determining which deal is right for you.
Ignore HOA fees
It’s easy to only lock-in on the listing price when considering what might be the right condo but don’t forget to pay close attention to additional expenses, like HOA dues and taxes. Also remember that condo buildings in Chicago with lots of amenities and common features tend to have higher HOA fees due to more maintenance.
Assume you need 20 percent down
While there are certain advantages to putting more money down upfront, like avoiding the extra cost of mortgage insurance for example, it’s not always necessary or mandatory to have a down payment of 20 percent. In fact, according to the National Association of Realtors, the median down payment for a home is 13 percent, and there are a number of available home loan and mortgage products that require as little as 0-3.5 percent down.
Drain your savings
Simply put—don’t do it. While spending all your money to buy a condo might seem like a good idea at first, life can sometimes throw a curve ball at you and circumstances can quickly change. A good rule of thumb is to still have three to six months worth of living expenses in your account AFTER you settle into your new place.