Two Words Realtors Hate

no-speak

The Two Words Realtors Hate

In the world of retail property sales (also known locally as the Multiple Listing Service or MLS), Realtors can write in a field called “Remarks” on their listing sheets.  You won’t find this on public access sites like Zillow.  It remains a private field, and only active agents can access it via their local MLS.  It is a powerful field and a few short years ago, the two words listing agents hate:  “motivated seller”, could be found on nearly every listing on the MLS.

Back then, the housing market was swamped in underwater properties, market times lagged, and the key words bottomed out. “Motivated Seller” lost its mojo.  Homeowners stuck in underwater mortgages were in bad shape.  Investors thick in cash were heavy hitters, driving prices down and reaping the rewards.  They didn’t need to look far or wide or drive for dollars.  Indeed, distressed homeowners were often throwing keys at them before the ink dried on contracts, so desperate were they to escape a failing mortgage and a trip to bankruptcy court.

Go Away, Serious Buyers Only! 

But today, the housing market has shifted.   Placing a property on For Sale By Owner frequently causes a huge wave of low ball offers and Realtors knocking on your door, because you’ve opened the floodgates to the non-retail housing market.  You’ve just put yourself on the wrong radar.  Property investors and licensed Realtors understand the market place and they can sense desperation when an owner gambles on the non-retail end of selling property.  If a homeowner doesn’t trust the fair market value of their home to list it on the MLS, why should anyone else?

Listing a property on the MLS is like an indirect endorsement: the listing agent first has to believe in the property in order to justify listing it at “X” price point.  Then again, if you’re not found through the MLS, most retail buyers (who are usually pre-approved) won’t ever find you.  Realtors prefer to show homes to pre-approved buyers.  They don’t like to waste time on clients “just looking” or window shopping.  So, unless you are in serious distress as a home seller, why advertise you’re motivated?  It is enough to have an active property listing to show you’re ready to sell.  No homeowner enjoys low ball offers unless they are truly distressed.

Why Motivated Sellers get the Kiss of Death on the MLS

Over the past few years, the housing market has shifted back to the seller’s domain.  Deals for investors are tricky, lack built in equity and afford slimmer margins.  Old, reliable techniques such as door knocking, yellow legal pad letters and driving around neighborhoods are returning.  Keywords are hot again on the MLS such as “fixer upper” and “needs work”.   But “motivated seller” remains the kiss of death for the average MLS property listing.

Why? When the MLS listing has “motivated seller” in the Remarks section, it knocks the seller out of top negotiating spot in the sale.  The seller has revealed his cards and sits exposed on the open marketplace.  As soon as the listing agent published the words “motivated seller” on the MLS listing sheet, it is too late.   Consider too, that hundreds of agents run automated daily property searches under those key word terms.  The searches get emailed to buyers and the offers will roll in, but they won’t always be good offers.  Keep in mind that for regular, full price retail homeowners (who are motivated, but not desperate):

  • 5%-10% below list price is a reasonable offer
  • 10%-15% below list price is unlikely, but possible
  • 15%-20% and below list price is insulting. **

(**unless the situation is desperate, then a truly motivated seller will be relieved of the financial burden)

Is any offer better than no offer?

I am often asked is any offer better than no offer?  That depends.  Each seller is unique and what works for them may not work for the next person.  Advertising on behalf of a client that the seller is “motivated” opens the floodgates, just like a For Sale By Owner listing.  Keep in mind that fair price and property value are not tied together.  The seller takes what the buyer offers and that becomes the market value.

Key words like “motivated seller” still have a purpose in the MLS.  Distressed property sales are often coded now as “short sales” or “pre-foreclosure” to the same effect.  If you’re a property owner in serious distress, use the MLS to get the burden off your shoulders and move on.  If you’re not in distress, and are just testing the market, clue your Realtor in to your plans.  Then, put it in writing.  If you put it in writing that you don’t want to see any offers that are 10% or more off list price, you can save a lot of time and hassle.

 

Interested in navigating the housing market in the Fox Valley area?  Find out more about how it works and contact me today at 630-854-4360 for a no-obligation marketing consultation.

 

 

Investors Find Streamlined Short Sales

patiencebirdegg

It’s going to cost you $500

When I first did a short sale in 2008, I had to give up part of my commission in order to close the deal. The bank refused to budge, the buyer refused to budge and the seller had no money and no time. The listing agent didn’t negotiate in-house and gave up control of the deal to a third party negotiator. The automated pricing matrix kicked in and dropped the list price. The bank refused to honor it. The deal ended up on the bottom of a pile of paperwork and sat on someone’s desk for months. Frantic calls went to voice mail boxes that were too full to accept additional messages. The bank was so backed up, it couldn’t clear its own inbox.

The experience left a bad taste that lingered for years. I vowed never to be sucked into a fruitless short sale again.

Nice niche

2015 is a different real estate market.  Inventory is short in the Elgin area and multiple offers are getting more common for regular sales. Investors shy away from short sales for good reason.  Short sales frequently attach nearly impossible standards to process their deals. We’ve routinely handled listings with a bankruptcy, two mortgages, a notice of foreclosure, and a wonky title before the real fun begins. Throw in an auction date or an FHA loan and one loose string can unravel the best laid plans.

It’s no wonder that few licensed agents seek out the extra trouble of the notorious short sale. There is nothing short about them. It’s a niche that requires tenacity, people skills, marketing, administrative checklists a mile long and unlimited patience. Each bank has its own documents, requirements, loss mitigation departments and rules to process a short sale. If there are two mortgages, double the workload. The average short sale package to kick off a request has 50 pages. And banks like to have documents with wet signatures, black ink only, in PDF format, faxed AND emailed. If you’ve closed a short sale, thank your admin folks for sticking to it.

Now let’s consider that on the listing agent is dealing with touchy banks plus aggravated homeowners. Besides housing issues and money issues, the sellers may have health issues, or have lost their jobs, be going through a divorce or much worse. Buyer’s agents know that even the steepest discounts on the best properties can sour a buyer enough for them to lose patience and move on to something with far less drama.

But what fun is an easy, simple deal? It would mean a boring blog post.

Streamlined short sales

But I am here to tell you, I’ve seen the bright side. Consider that there are fewer short sales in today’s inventory. I can almost guarantee there will not be multiple offers on the table, so, the competition is lower. If you can put up with 90+ days to process, the discounts on a short sale are still viable for some investors and many are in good condition.  One turnkey investor buys distressed short sales and then rents them back out to the homeowner.  A high risk endeavor, but every investor is unique in their RE deals.

I’ve come a long way since negotiating that deal a few years ago. In 2015, short sales have matured. Spoiler Alert: short sales are still a huge pain. But they don’t have to be for a buyer. My biggest fear of all that work and no reward is finally fading. Why? Banks are now actively engaged with proper systems in place to push deals through. They know how to crank them out more efficiently.

Who’s ready to take a dip in short sales?

What has your experience been with short sales?  Did your deal turn out great or been a nightmare?  Let me know!

Jennifer Kinzle is a  licensed e-PRO broker with ​Charles Rutenberg Realty.  Contact her via jkinzle73@gmail.com or 630-854-4360.  ​http://www.elginfoxvalley.com/

Spring into the 2015 housing market!

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The 2015 Spring market will kick off March 20 and I want to make sure my clients have the information they need.  See my last post regarding the perfect price points here:  “Is your home priced wrong?”  http://wp.me/pMOZs-jx

Selling homes and spring clean ups go a lot further when there’s less snow.  Not only are the days longer, less snow makes showing homes much easier!  You can be sure that any agent will tell you to de-clutter your home before you put it up on the MLS.  So go ahead this spring and box up those old clothes, shoes and extra clutter around the house and hand it off.  Consider getting a jump start for your taxes on your charitable donations for the year!  And Goodwill will thank you for it.

March is also a great time to get a property report on your home to understand the current market conditions.  Market values change, so ask an agent to pull a list of area homes that are similar to yours to see what the current is up to.  Doing a little research now can help you down the line.  Often, sellers update their homes beyond the market value, adding high end items such as granite counter tops and stainless steel appliances when most of the neighbors forego such amenities.  Updating is great, just keep it in line with the expectations of your neighborhood so that you’ll retain the most dollars for your hard work when it comes time to sell.
spring letters
Want to know more about your home’s current market value?   Ask a Realtor for a current market report and find out what’s really going on in your neighborhood.

Are you in the Fox Valley area? Contact me below to get a personal review of your home, no strings or commitments.

Is your home priced wrong?

The 2015 Spring Housing Market Approaches: Are you on target?

ontarget

I’ve shared this with my local clients and I’m happy to pass it along to you.  It is no secret that the number one reason why a home doesn’t sell is price.  But if you’re lacking visitors, offers, showings  and drive ups as well, the property is more than likely over priced by 12% or more.  If a property gets some visits and showings, then it is closer to hitting the sweet price point, roughly between 6 to 12% over the purchase price.  Finally, if a home gets plenty of showings and visits but no offers, it is likely over priced just by 4-6 %.  Dropping the price 1% at this point will often open the floodgates to hesitant buyers.   Keep in mind too, that the longer a home sits on the market, the less appealing it looks to buyers.  Consider a new market comparison at the 90 day mark to see if anything has changed in your specific neighborhood.

While the Chicago markets are not back to their previous levels, there are plenty of buyers who are ready and willing to purchase great homes this spring.  Despite the frigid winter, homes sales have continued without fail.

Want to know more about your home’s current market value?   Ask a Realtor for a current market report and find out what’s really going on in your neighborhood.

Are you in the Fox Valley area? Contact me below to get a personal review of your home, no strings or commitments.

Jennifer Kinzle, e-PRO Broker
Charles Rutenberg Realty, Elgin Fox Valley

2015 New Year’s Resolution: Buy a home. Condo or Single Family?

Condo v House
Stressing over New Year’s Resolutions?  2015 brings with it some big challenges of keeping fresh resolutions, like better eating habits, joining a gym or braving the mall to return holiday gifts.  But, some first time home buyers are also stressed with a big choice: should they pick a low maintenance condo or a single family home?

Let’s consider what a condo offers:

Advantages of Owning a Condo, Townhome or Duplex Home

Sharing is caring.
The first thing that first time home buyers notice about these types of homes are the close neighbors on a shared wall.  Either you will get to love your neighbors or you won’t, but be prepared to always have someone nearby.  Living with shared walls and close neighbors means cooperating with folks.  Just like an apartment or your mom’s basement, thin walls may exist in your new unit. Not a big fan of garlic?  Strong cooking spices may waft through the vents, and loud music or a set of drums can interrupt your quiet movie night.  Kids playing outside at 7am may not know you just worked the overnight shift and need to get some sleep.

Lower price point.
A lower asking price can make or break a deal for a first time buyer, so they can appreciate the lower price point of multi-units like a duplex or townhome. In many areas, a condo unit with two bedrooms and one and a half baths will be cheaper than a 3 bedroom, two bath single family home.   Condos often have less square footage, which costs less to heat and maintain.  Many first time buyers prefer to have a smaller unit in a dream neighborhood, insisting on a great location over square footage for their top priority.

Reduced maintenance commitments.
Having no grass to mow or flowers to clip can be a big plus for some new homeowners or a major negative for aspiring gardeners.  Dog owners may prefer opening a back door to a fenced in yard versus three daily walks.  However, many folks with long commutes or busy social lives may prefer the maintenance free condo, enjoying guilt free weekends without the worry of grass clippings and weed control.

Add in a monthly fee for the housing association (HOA).
This fee is part of the condo Home Owner’s Association (HOA) and covers the general maintenance like snow removal, garbage removal, lawn and landscaping as well as pool maintenance (if available).  This fee covers communal areas and is often higher at older buildings which require more maintenance every year than a newer building.  Again, these fees are due monthly, have a tendency to go up incrementally and are not tax deductible at the end of the year.

Restrictions may apply.
Keep in mind that major renovations are not permitted inside your walls, such as adding a skylight or removing a wall to open up a kitchen.  Weight limits and pet restrictions can also apply.  Carpet and paint are usually allowed at the owner’s discretion, but items like the type of window and front door are often on the “must be approved” list by the condominium homeowner’s association.  Also, most units cannot be rented out as an investment property.  Checking with the association rules before you purchase the unit will help alleviate this issue.

Dog owners need to check with the condo association on furry family members’ weight restrictions and breed limitations before making a purchase.
Is your condo - NO DOGS ALLOWED? -

As we’ve seen, owning a condo does have advantages and disadvantages.  Now let’s consider the single family home from a first time home buyer’s perspective.

Advantages of Owning a Single Family Home

Single family homes are typically more expensive.
In this instance, a buyer is paying extra for having no shared walls and is willing to pay more to get more privacy.
The listing price for single family homes is often higher than a multi-unit home.  This can force first time home buyers to rethink their neighborhood, commute time, square footage, or downsize the number of bedrooms.  Some decide to wait until their income increases, just so that they afford a larger mortgage on a single family style home.

Sharing and socializing are optional.
Since your walls are not shared, the property is yours in its entirety.  Often with a large backyard, a single family home can have amenities like vegetable gardens, pools, decks and plenty of grass to mow and snow to shovel in the winter.

No homeowners association fee.
Unless you’re in a community like South Elgin’s Thornwood, most single family homeowners will not pay a monthly association fee for landscaping, snow removal or pool maintenance.   Be sure to find out from the Realtor if the community lies within a structured Home Owner’s Association (HOA).  However, all the home maintenance on a single family home, including yardwork, landscaping and snow removal, is the sole responsibility of the individual homeowner.  They must handle their own upkeep, or hire a private service to trim the bushes, cut the grass or clear a path up the drive in a snow storm.  This is an added expense.  Winters in Elgin Fox Valley area can be hit or miss for icy cold, snow filled driveways, so be sure to keep that in mind when considering a single family home.

Greater responsibility offers more freedom for remodeling and landscaping.
Single family homes will have far fewer restrictions on what you pull out, demolish or put inside your home.  Permits  and local housing codes notwithstanding, homeowners have many more options for remodeling, such as adding rooms, knocking out walls or raising ceilings.  If you’ve always wanted to put in a waterfall and an in-ground pool, you’ll have a better shot at attaining such a goal with a single family home than in a courtyard of a townhome.

Property values increase faster for single family homes.
While both multi-units and single family homes hold their value over the long term and both provide the basic necessity of a having a roof over one’s head, single family homes still appreciate more rapidly than a condo, townhome or duplex unit.  Single family homes also offer a better return on investment than ownership of a condo, especially for tax purposes.  In many cases, the condo association dues and fees, plus restrictions, often outweigh the long term gains that a single family home can reach.

Not everyone needs a single family home as their first home purchase.  Time commitments, a person’s income, taxes, dues and amenities are all important factors to consider when thinking of making a move to a first home, no matter the size or style.

Let’s consider the good news for 2015, that first time buyers are no longer priced out of the housing market.  Also, with the new Fannie Mae mortgage down payment requirements being reduced to 3%, potential homeowners will find it easier to leave their old rentals behind.

If you know someone who is ready to stop paying their landlord, send them to ElginFoxValley.com to start a new home search today for free.  Or, contact me to get started on a home search in the Fox Valley area in Geneva, St. Charles and Elgin today!

Jennifer Kinzle is a licensed residential e-PRO broker with Charles Rutenberg Realty.  A published writer, she informs customers and clients about the local Elgin Fox Valley real estate market.  Got a great home buying story?  Please leave a comment below!  Thanks!

Basement Blues?

rainbowbasement

It happens every year.  Right after the holidays pass, the reality of a long, cold Illinois winter smacks us on the forehead.  We’ve got shut in fever and we’ll be looking for something to do in the tiny sliver of daylight we get in January.  But wait, there is another option.

Many folks already know the best way to deal with the dark and cold weather of winter in the Fox Valley area requires plenty of indoor activities and lots of imagination.  If you’re a parent with kids under age 5, you’ll be looking for some fun things for the kids to do indoors.  After running through the local library programs, South Elgin’s Never Grow Up playroom, friends’ playdates and kid classes, you might want to think about investing in your own basement!

As clutter keepers, basements rule.  But think about clearing out a section for play time out of that clutter and even an unfinished basement can be a change of scenery for the winter indoor playtime.  It can be as unfancy as a few area rugs to ward off a chilly concrete floor, plus a few bright lights and you’re good to go.  We hung a chalkboard on the wall and let the mess play out on the floor without worry or fuss when a masterpiece strikes back.  When we put the tricycle and scooters down there, the kids soon had a circle race track going and are wearing tracks in the floor with all the use.  Unfinished basements do come in handy!

Painting-with-hands-and-scouring-pads
photo by http://www.mynearestanddearest.com

In addition, a basement either finished or partially finished, can be a nice selling point for future residents when it is time to change homes.  Game rooms, wet bars, work out rooms and organized storage areas are all a plus when buyers are seeking a new home.

However, don’t put necessary home fix ups on the back burner, when considering a basement remodel.  The best bang for your buck is to start with the kitchen and baths in any house is always these two areas first, the rest can wait.  If you’ve already got those basics covered, then consider a basement update.  Ideally, if you’re planning on staying long term in the home (10+ years) remodel for yourself.  A full basement remodel that you enjoy for the long term is a worth while investment.

If you plan on moving out in 5 years or less, why not consider a remodel with an eye towards the next home buyer.   This is a short term investment, so get the basics done and don’t worry about the rest.  Homeowners  in this scenario are likely to recover a large part of the costs when they are ready to sell.

If all else fails, bundle up and head outdoors.  Although the daylight goes quickly, there’s a lot to enjoy right here in the nature loving Fox Valley area.

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photo by Teklanika Nature Photography

 

 

 

Coming Soon! The Trails of Silver Glen in South Elgin

pulte interior
Welcome home to The Trails of Silver Glen!

New home buyers in South Elgin now have 127 lots to choose from starting in November 2014.  Homeowners looking for gourmet kitchens, open floor plans, rich hardwood floors and oversized, bright windows will find it all right here. Thoughtfully designed floor plans, from the experienced home builders of Pulte, puts the best features at your fingertips.  Granite countertops, stainless steel appliances, luxurious soaking tubs and spa-like master baths are available features.  Why not enjoy your home and neighborhood on the southern edge of South Elgin?

pulte interior2

The first home deliveries are scheduled for summer 2015.  Pulte is offering new homes to buyers looking for lots of space in South Elgin but with the amenities of Saint Charles’s recreation and top tier schools. Homes will be offered in two sections, with square footage starting at 2,400.

pulte interior 3

Great neighborhood schools in District 303 include Ferson Creek Elementary, Haines Middle School and Saint Charles North High School.  The Trails of Silver Glen have easy access to great shopping and are close to nature trails, parks and recreation.  Located at the corner of Silver Glen and Randall Road, this new subdivision offers convenience for homeowners and visitors alike.

Pricing has not yet been announced, but is expected to begin in the high $300’s.  Lock in your preferred lot and secure your financing now, while interest rates remain low in 2014.

There are no models on site to tour currently.  However, similar models in other subdivisions are open to walk through with a buyer’s agent.

Real Estate Branding Nightmares

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Cobb & Webb Realty

 

giantspider
Spider Free Homes

 

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Laughing Coffin Real Estate

 

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No Vacancy Real Estate

 

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Reaper Realty

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Bloodsucker Real Estate

 

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Warlock Realty

 

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Last Listing Realty

 

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Two Story Terrors

 

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Helen Back Real Estate

 

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Scare & Crowe Realty

 

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Deadbolt Realty

 

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Coffin Estates Realty

 

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Breaking Dawn Real Estate

 

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Stake-Free Homes

 

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Two Mummies and a House Realty

 

 

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New Crypts Realty

 

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Haunted Homes Realty

 

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Headless Homes, Inc.

 

 

 

(*Disclaimer: all names listed are pure fiction and any relation to a real business name, living or undead, is completely unintentional.  Happy Halloween!)
mikewebowskihalloween

Contingency Clauses-Hedge Against Disaster

man-tearing-contract

Who wouldn’t like to know what the future holds?  In my line of work, knowing the future would be helpful.  I’d like to know if mortgage rates will rise, if that renter will skip town, and if the foundation on this property will fall into a sinkhole.  But as a non-superhero type, I have to rely on more ordinary means.  One way to hedge against future distress when it comes to buying a property:  contingency clauses.
contingencies-list

A contingency clause is part of the purchase agreement you, as a buyer, signs when submitting an offer to buy a home.  Contingency clauses are most often used under financial or appraisal terms.  A financial contingency is related to a buyer’s ability to secure a mortgage (financing terms) for the property.  If the financing falls through, and the buyer cannot meet the financial obligations, the seller agrees to release the buyer from the purchase agreement and refund the earnest money.  I have seen the seller be unrelenting and demand satisfaction on the contract.  This gets ugly fast, so I usually recommend  a quick and clean cancellation so the seller can move on to find a more suitable buyer.

An appraisal contingency is one based on a third party’s assessment of a property’s value.  If the list price is $200,000 and the independent appraisal comes in at $150,000, the buyer can break the contract with the appraisal contingency and back out.  Or in some cases, the buyer can use this to re-negotiate the purchase offer price.  In such a case,  the seller is usually wiling to lower their price in order to get the property sold.

Another version of a contingency that I’ve seen used is based on a third party home inspection.  Most common on older homes, the buyer is cautious in approaching a home because of it’s general condition.  They put in a contingency clause that allows them to cancel the contract if a major defect is found in the property, such as a crumbling foundation, asbestos, or lead paint. Such issues involve an expensive and often lengthy repair and many buyers shy away from such issues.

There is a catch however, with using contingency clauses.  Sellers who have a lot of interest in the property and see multiple offers tend to skip over the hassles involved with contingency clauses.  Using them in a multiple offer situation can stack the deck against the buyer.  A purchase agreement without any contingencies makes for a stronger offer than one with several contingency clauses in place.

Looking for property listings?   Check out http://www.elginfoxvalley.com/

Have you seen my mortgage?

Elgin, IL  – Where’s the mortgage?  When CNN’s article posted from January 2014,  http://money.cnn.com/2014/01/10/real_estate/mortgage-rules/index.html on the new mortgage rules ,I was wondering how it might impact local buyers.  Sure enough, the new restrictions have leveled the playing field this year.  I found the low inventory was less of an impact than buyers unable to secure financing this summer.

The two big points from last January were trotting out someone’s ability to pay and making qualified mortgages.

Foreknowledge of one’s ability to pay is a bit ridiculous.  Most people are not independently wealthy and work for a living.  If their job is downsized, so is their income, hence their ability to pay is removed.

No lender can possibly tell if a person will pay back a 30 year mortgage, starting on Day One.  So, of course, there is a lot of guesswork that goes into the process, starting off with debt-to-income ratios, which according to the article is “how much you owe divided by how much you earn per month, including the highest mortgage payments you would be required to make under the terms of the loan”.  This means that whatever your current bills are, the bank has to see it through their lens of “this will never change”.  Hence, if your ratios are not on par now, get them there fast.  Keep in mind that it is ok, in bank terms, to be seen as making steady payments on student loans and rent (good debt) instead of running up huge credit cards or other unsecured loans.  Pay Day loans are a no-no.

Mortgage lenders also are seeking to make qualified mortgages.  While I am sure businesses do not try to make bad loans on purpose, mortgage lenders seek to reduce the number of lemons by combing through more data on a person’s salary history, income levels, debts and rules like 43%.

As noted by Les Christie, CNN’s article:

  • “To make sure you aren’t taking on more house than you can afford, your debt-to-income ratio generally must be below 43%. This rule is not absolute. Banks can still make loans to people with debt-to-income ratios that are greater than that if other factors, such as a high level of assets, justify the risk.
  • Qualified mortgages cannot include risky features, such as terms longer than 30 years, interest-only payments or minimum payments that don’t keep up with interest so your mortgage balance grows.
  • Upfront fees and charges cannot add up to more than 3% of the mortgage balance. That includes title insurance, origination fees and points paid to lower mortgage interest rates.”

Jumbo loans are run a bit differently, as noted by One Mortgage’s Steve Smither.  According to Steve, jumbo loans (those over $417K) afford an even higher debt to income ratio.  Different lenders have separate guidelines for jumbo loans because lenders normally don’t bundle and sell jumbo loans.  However, if the lender expects to sell the loan, they will look for at least 20% down payment.  Requirements for credit scores are typically much higher as are the requirements for reserves (6-12 months cash held in reserve).   Steve also notes that interest rates can be dependent on the individual bank, with variances as much as a quarter point or higher.  Also, he notes that jumbo loans can still qualify for Fannie and Freddie Mac low interest rates if your lender splits the loans into two.  A second mortgage can go up as high as $450K.

That being said, I am not a mortgage lender, nor can I quote rates off the top of my head.  But Steve can and he does it quite well.  Got questions on mortgages?  Call Steve,  847-963-1000.

Have questions on real estate?  Email me at Jennifer@ElginFoxValley.com or visit my website at http://www.elginfoxvalley.com for all things newly listed in Elgin, IL.