COVID Rental Assistance

Throughout the Coronavirus COVID-19 pandemic I have had dozens of renters & a few landlords reach out to me for my advice on how to handle COVID rental assistance due to job loss & back rent. Below is some helpful information & how to handle this tough situation as both as a renter & a landlord.

IMPORTANT: Applications for the Emergency Rental Assistance grant will be open until Friday, August 28

IHDA developed the Emergency Rental Assistance Program (ERA) to support Illinois tenants unable to pay their rent due to a COVID-19-related loss of income. Loss of income can be job loss, furlough, loss of hours, decreased wages, etc. Tenants whose application is approved will receive a one-time grant of $5,000 paid directly to their landlord to cover missed rent payments beginning March 2020 and prepay payments through December 2020, or until the $5,000 is exhausted, whichever comes first.

Eligibility Requirements
  • Your household income before March 1, 2020 was less than the maximum allowed for your area – Check you eligibility here
  • You or an adult member of your household has had a loss of income due to COVID-19. Loss of income can be job loss, furlough, loss of hours, decreased wages, etc.
  • You have an unpaid rent balance that began sometime after March 1, 2020

Make sure to verify that you have the following information prior to beginning your application for COVID Rental Assistance:

  • Landlord’s full name
  • Landlord’s accurate email address
  • Government issued ID that matches your address
    • If your ID does not match the address on your application, you will need to upload proof of your current address
Frequently Asked Questions
  • How will my landlord know I applied for COVID Rental Assistance? Notify your landlord that you applied for assistance under ERA. Let your landlord know that they will receive an email from the IHDA ERA program inviting them to submit required documents
  • What if the address on my lease does not match the address on my driver’s license or ID? In order to have a completed application for rental assistance, you must provide a legal document with your current address.
  • I have a verbal lease with my landlord, am I still eligible to apply? Unfortunately, you’re ineligible for ERA assistance if you do not have a written lease or contract.
  • I have an eviction pending, can this program assist me? Yes, you may still apply so long as you have not been evicted. Please inform your landlord, legal representation and county judge (if applicable) that you have applied for the program
  • My lease has expired, am I still eligible to apply for COVID Rental Assistance? Unfortunately, you’re ineligible for this assistance if you do not have a current lease.
  • When will I know if my application has been approved? You will receive an email within 2-3 weeks of your application alerting you if you have been approved for the grant. Your landlord will receive the funds as soon as 10 business days after approval.
  • Do I have to pay the $5,000 back to IHDA? No, you will not have to pay this assistance back is a grant and repayment is not required.
  • Will I be taxed on the $5,000 COVID Rental Assistance grant? No. The assistance is due to an emergency and is structured as a one-time grant payment; neither the tenant nor the landlord will be taxed
If you need assistance applying..

IHDA has partnered with 62 Community and Outreach Assistance organizations standing by to help you at no cost. You can find a list of these organizations via the Resource button on era.ihda.org. For additional assistance you may also call IHDA’s call center at (312) 883-2720, or toll-free at (888) 252-1119.

For more information visit IHDA’s website.

I’m here if you have any questions – Reach out to me here or send email to KShaw@atproperties.com!

How to ‘Regret-Proof’ Your Home Purchase

I’ve found that one of the biggest hurdles first time buyers or purchasers in general face is the idea of *regret* or having cold feet. Are you making the right decision? Is this the property for you? Are you sure you are ready for this commitment? Will something better come on the market? What if you need to move next year? So many questions. While I don’t have the exact answer to these questions, I have complied a list of ‘regret-proof’ steps to help you be confident in the purchase of your first or next home.

Step 1: Talk to your Lender

If you’re getting a loan, this is a very crucial first step. While I know everyone loves a little online house shopping, if you are planning to purchase you need to get serious about your budget & understand your limits. Your lender will work with you on a pre-approval, discuss loan options & programs, & establish an ideal monthly payment that makes sense for you, your lifestyle, & your comfort level.

Step 2: Understand Unexpected Costs

The biggest regret I see buyers have is not understanding the unexpected costs & general costs of home ownership. While it’s easy to say owning > renting because your $2000/mo can go towards your mortgage & equity!! BUT, trading your monthly rent towards your mortgage doesn’t always translate that cleanly. You need to take into account HOA fees, taxes, PMI, etc. While your Realtor & lender will calculate & work within those limits, don’t forget about the cost of homeownership. I usually tell my clients to budget 1-3% of their home purchase on yearly maintenance. That may be a conservative number, but you need to be prepared to make necessary repairs when/if they are needed.

Step 3: Don’t Max Out your Pre-approved Limit

You are pre-approved up to $750,000 – Congratulations!! People can often ‘afford’ much more house than they should comfortably be spending. A common theme I see with first time buyers is maxing out their limits & becoming house poor. Meaning they save & save for the down payment to afford the dream condo or single family home, but upon closing can’t afford to furnish it, sacrifice their gym membership, or give up the next few family vacations. While the pride of homeownership is an amazing feeling, don’t over extend you or your budget beyond your comfortability.

Step 4: Work Backwards Towards your Home Budget

Home buying can get emotional quickly, but don’t let it. Be dedicated to your budget by understanding your limits, your income, your current obligations, & honor whatever current/upcoming debt you may have. While your pre-approval is great, I always recommend my client be painstakingly pragmatic when home shopping. Don’t get me wrong, if you are looking for a dream house with no budget, I am more than happy to assist 😉

Nobody who ever gave his best regretted it. – George Halas

What You Need to Know About Tax Proration

Now that we know all the steps of a home purchase & have the terms down, let’s talk about taxes. While taxes may be the last thing on your mind as you advance through the home buying process. Yet, there are important tax considerations that need to be worked out before you get to the closing table. This post will tell you what you need to know about tax proration.

Property tax proration is a way to split property taxes fairly to ensure that each side is paying for the specific time that they were owners of the property. Since Illinois property taxes are paid in arrears, tax proration ensures that the buyer is fairly compensated for the tax bills they will receive after the closing, for the period in time in which the seller still owned the property.

Your real estate broker can help you better understand what tax proration is, how it works, and how it is calculated. Once you have a home under contract, your real estate attorney will work with the seller’s attorney to determine the exact amount due to you during the attorney review process.

The Calculation

Below are six facts about the tax proration process. When you reach this stage, your real estate attorney will guide you along with the help of your real estate broker.

The Facts

  1. Sellers will take responsibility for the property taxes up until the day the property is officially closed. The buyer takes on the property taxes from the day the purchase is final.
  2. Tax proration may be a large dollar amount on the closing statement, because it is prorated to the day of close.
  3. The real estate attorney and/or broker can check the county assessor’s website to determine any exemptions or freezes and anticipate changes to the tax bill. Also, always be sure to file for your homeowners exemption after closing!
  4. With new construction or rehab properties, there is special attention that needs to be paid to the real estate tax credits and prorations. This is because the property upon which the listed taxes are based is no longer the same property that is now being assessed as rehabbed or new.
  5. Unlike paying your rent or mortgage on the 1st of every month, 2019 property taxes are paid in 2020 so therefore taxes are prorated at a slightly higher amount because taxes will likely go up.
  6. An escrow account is used in cases where the parties are not certain of the anticipated change in the real estate taxes and cannot agree to a final credit until the bills come out. The seller sets money aside in the escrow account and those funds are issued once the tax bill arrives.

Whether you’re a buyer or seller, it’s important to understand tax proration so that when you arrive on closing day, you’ll feel fully informed and prepared. Be sure to consult your real estate broker as early as possible in the homebuying process so you are comfortable with all of the steps to come!

Terms You Need to Know When Purchasing Your Home

Welcome back to my #homebuyerseries! After last weeks all encompassing guide, I am excited to continue to virtually educate on the in’s & out’s of buying your next home! I am going to post smaller bits & pieces that are quick reads. This week’s focus is on all of the real estate terms you are likely to encounter throughout your purchase.

Pre-approval vs. Pre-qualification – A mortgage pre-approval is an estimate of the amount you can borrow based on a lender’s verification of your financial documents, employment and credit history. Pre-approval is essential in a competitive home-buying environment because it immediately demonstrates to a seller that you are a qualified buyer (keep in mind it is not an actual loan commitment, but it gives you an important head start on the process). Pre-qualification, on the other hand, is an informal, preliminary assessment of your borrowing power based on basic information you provide to a lender.

Comps – Short for “comparable properties”, comps help determine the current value of a property. They are chosen based on property attributes like price, location, condition, features and other criteria.

CMA – Also known as a Comparative Market Analysis, this pricing tool is an evaluation of a home’s current value based on recent comps. Once you’ve found a home you love, your broker will prepare a CMA to help you formulate an offer.

@tip: @properties has an exclusive, interactive CMA that is the first continuously-updating CMA platform in our local market. Contact me if you want an up-to-the-minute, accurate CMA sent directly to your inbox.

Appraisal – If you are obtaining bank financing, the bank will order an appraisal, which is an opinion of a home’s value. Unlike a CMA, an appraisal is performed by a licensed appraiser who must follow a number of established guidelines. While appraisers use the same data as real estate agents to find comparables, they have additional guidelines to follow in order to protect the lender.

Pocket Listing – Also known as an exempt listing, a pocket listing is a property that has a signed listing agreement but is not yet listed on the Multiple Listing Service (MLS). This approach is typically used by sellers who want to protect their privacy or pre-market their home before it’s ready to show.

@tip: With the help of @gent – @properties’ exclusive internal communications app – our brokers are alerted to pocket listings that match your preferences before anyone else!

Contingency – A condition that must be satisfied before closing occurs. These conditions are written into the contract and typically include things like a home inspection, mortgage financing or the appraisal. If you include a home inspection contingency with your purchase agreement, for example, you have the right to have the property inspected within a specified time period, and can cancel the contract or negotiate repairs depending on the results.

As-Is – When a home is listed for sale “as is”, it means the property is being offered in its present condition and the seller does not intend to make any repairs or improvements. As a buyer, you are usually advised to include an inspection contingency as part of the contract, giving you the option to walk away from the deal based on the inspector’s findings.

Fixed Rate vs. Adjustable Rate Mortgage – Two types of mortgages available to homebuyers. A fixed-rate mortgage has the same interest rate through the entire term of the loan, while an Adjustable Rate Mortgage (ARM) is a loan in which the interest rate periodically adjusts based on a specified index. Also, what is PMI.. more on that here.

Earnest Money – A deposit, given by the buyer to the seller, which secures the contract until closing and lets the seller know you are serious about the transaction. An initial deposit must be given with the contract, and the balance of the earnest money is usually due upon attorney approval. Earnest money is typically held in an escrow account until the closing, when it may be applied to the down payment and/or closing costs.

Closing Costs – Expenses and fees associated with a real estate transaction that are paid at the closing. Examples of buyer closing costs include a loan origination fee, title insurance, survey, attorney’s fee, home inspection fee, appraisal and credit report fees, and prepaid items such as escrow deposits for taxes prorations and insurance.

Title Insurance – An insurance policy that protects the buyer or lender against defects or problems with the title when property ownership is transferred. Title insurance protects against claims for past occurrences, while other forms of insurance protect against future events.

Of course, there are SO many more terms to know, more details to be aware of, and steps involved in purchasing your first home. This is just a quick guide to get the conversation started. As always, if you have any questions – I’m here to help!

Tips & Tricks to Renting an Apartment in Chicago

Tips & Tricks to Renting an Apartment in Chicago

Spring in Chicago is peak rental season & it can be overwhelming navigating the market on your own. As a real estate broker, I don’t just represent sellers & buyers, I also help renters find their place in Chicago – for FREE. These are a few of my tips I share with my clients prior to them renting an apartment in Chicago.

When to Start

My advice is always to start your search at most 60 days prior to your ideal lease start date. Some over-achievers like to start a few months ahead of time, but unfortunately that is time wasted. It’s good to understand the market, but something online now won’t be available in a few months & the prices may increase/decrease depending on the time of year. Landlords are required by the state of Illinois to provide their tenants a renewal notice of at least 30 days prior to lease expiration & 90 days at the very most. Therefore, most landlords don’t know if the unit will be available until 60 days prior to lease start.

How to Determine Your Budget

Most landlords will follow a simple rule when qualifying their tenants, 3×1 rent to income ratio. Therefore if you net $6000 a month, your rent should be around $2000 a month. You should try not to exceed more than 30% of your monthly income on living expenses. This is a normal metric landlords use to qualify tenants, however there are exceptions to every rule & some landlords will over look this.

Additionally, be aware of your credit. If you have a less than desirable credit situation, be up front about it & see what options you have. Every apartment will require a credit & background check, so before you pay for them to run your credit understand where you are at & be upfront about it.

Choose Your Neighborhood

Chicago has 77 recognized neighborhoods, with numerous sub-neighborhoods in between. It can be a tough choice figuring out what neighborhood is right for you as each is so unique & have so much to offer. There are many things to consider, but the items below should be the most important.

  • Price
  • Proximity
  • Amenities
  • Lifestyle

This is a great article on some of Chicago’s most popular neighborhoods.

What Fees Should You Expect

When renting an apartment in Chicago renters often overlook are the fees associated with renting. Working with a broker is FREE, so that’s one fee you don’t need to stress over 🙂 Depending on the style of building, type of unit, area of the city, etc. fees vary. Below are a few fees you will want to be aware of when signing a lease:

  • Application Fee
  • First month’s rent: due at lease signing to secure the unit
  • Security Deposit or Non-refundable Move-In Fee: due at lease signing
  • Utility costs
  • Move Out Fee
  • Elevator Rental Deposit
  • Admin Fees
  • Renter’s Insurance
  • Lease Registration Fee
  • Pet Registration Fee
  • Pet Rent

Why You Should Use A Real Estate Broker

Finally, my biggest piece of advice is to use a Real Estate Broker. This is a free service to you as the landlords want us to bring them qualified tenants & while third party websites can be a great resource – they are not always reliable. Use a Broker who knows the market & understands the process, don’t waste your valuable time searching endlessly when you can have someone do the work for you. Broker’s have access to reliable, accurate, & available listings currently on the market.

If you do use third party websites, please be smart. While I always recommend working with a broker, I have had clients have good experiences with Hotpads, Apartments.com, and Domu. It’s common sense but don’t meet strangers off Craigslist or send funds in advance of lease signing. Research the subject address & do your due diligence that the property is actually for rent, the lease is legally binding, & you are legally able to occupy the unit. Know what your rights are – Read up on Chicago Renter’s Rights.

If you have any questions about this information above or are interested in renting in Chicago reach out to me & I will make it easy for you! Also, check out my favorite apartments hacks here.

Happy Renting!