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Buying a Condo Brochure Final

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    Reaching The Dream to Your Own Home

    A R E S O U R C E F U L T O O L F O R

    F I R S T T I M E H O M E O W N E R S

    Guide to Affordable

    Homeownership Options

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    Spanish Coalition for Housing

    Spanish Coalition for Housing (SCH) is a non-profit community based organization whose mission is to provide comprehensivecounseling, education and housing resources necessary for low-to-moderate income families to develop competence andresponsibility in meeting their financial and housing needs;

    provide the necessary information and assistance to renters andhomeowners, enable them to avoid rent delinquencies, mortgagedefaults and foreclosures; aggressively market availableresources to all low and moderate income Spanish speaking

    persons and others who require advocacy to which ensures thatthey have equitable opportunity to access resources.

    SCH services the Chicagoland area, the North Side office servesnorth/northwest communities and the Humboldt Park Re-Development Area; the Lower west side office serves thePilsen / Little Village Empowerment Zone Area; the Southeast

    Side office serves the Calumet Enterprise Zone Area.

    Mission Statement

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    Table of Contents

    Mission 2

    What is a Condominium 4

    Advantages of Buying a Condominium 5

    Home Owners Association 7

    Assessment Fees 8

    How to Purchase a Condominium 9

    Frequently Asked Questions 11

    Real Estate Profiles 13

    Community Land Trust 20

    Affordable Housing Programs 22

    References 23

    Summary/Sponsor 24

    Spanish Coalition for Housing

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    What is a Condominium?

    Chicago is a large metropolitan city.

    However, with a growing population, housing

    in Chicago is becoming more and more ex-

    pensive. With the value of square footage in

    the city steadily increasing, construction of

    large single family homes is declining. Condominiums provide an affordable alternative to

    building wealth and ultimately your quality of life. So, rather than throwing your money

    away on rent and paying off someone elses investment, consider investing in your own


    A condominium, also referred to as condo , is a housing tenure in which individual

    units are portions of property individually owned. Each unit is property of an owner, how-

    ever common areas, such as hallways and recreational facilities are jointly owned. Your

    ownership extends inward, from your interior walls, floors, and ceilings. In addition, you

    are also a partner with all other owners in a complex. Therefore, the exterior structure i.e..

    foundation, exterior walls, roofs, common area, and amenities are considered property of all

    the owners and are regulated and maintained by the Condominium Association.

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    Advantages of Owning a Condominium

    Renting vs. Owning

    While renting you will not be able to build any wealth. Through owning property

    you will. You should not let high interest rates get in the way of your dream of

    homeownership. Today interest rates average 6.25%, but

    20years ago they a were as high as 19%. When considering

    whether to buy or not, don't let interest rates be the only rea-

    son to hold you back, think about the long term benefits,

    building wealth.

    Invest into your own future .

    Building Wealth

    Equity is defined as the value of a property minus the

    owner's outstanding mortgage balance. Therefore if you pur-

    chased a condominium two (2) years ago, at $200,000, and

    now that same condominium is worth $240,000 you just built

    $40,000 in equity. Further, any payment made on the principle

    will also be added to that amount, increasing your equity, and

    ultimately your wealth.

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    Granted you may not be able to immediately move into your ideal house, however rather

    than paying off someone elses investment while attempting to save, consider temporarily set-

    tling in a more affordable property to build equity. Unlike with single family homes, the dollar

    amount per square foot is significantly less, due mainly to land cost. You can build many more

    condos than you can single family homes on the same amount of land. Today the market for

    building single family homes is decreasing. Prices for these properties are soaring due to an

    increased demand for single family homes and limited supply being built.

    Tax Deductible

    While we may already know that one has tax benefits to owning your own condomin-

    ium, one is not exactly sure what they are. Among the biggest, is being able to deduct the

    property taxes and even in some cases assessment fees from your taxable income. Further, you

    can deduct interest and property taxes every year and any additional points you paid in the year

    you purchased your condo. Points refer to a form of pre-paid interest. Although there are

    limits as to how much and how little can be deducted, one is allow to deduct up to $100,000 of

    home equity indebtedness.

    Security and Pride:

    Being able to go home after work, knowing that your day at work wasn't simply to pay

    the bills but to build a more stable quality of life, will create wonders on your outlook on life

    and self accomplishment.

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    Home Owners Associations

    What is a Condo Association ?

    An elected group of unit owners that act in the best interest of the condominium associationwithin the guidelines set out in the condominium association by- laws.

    Features include:

    A private government.

    Headed by an elected Board of Directors.

    Collect fees, fines, and assessments from Condo owners.

    Owners regardless of unit size, have an equal voice on voting issues.

    Owners, are allowed to vote in elections to choose the board members.

    Enforce the associations bylaws, governing documents and regulations agreed up bythe committee.

    Allocate and distribute condo association fees for necessary maintenances and repairs

    Manage the common areas of a complex such as landscaping, common buildings, rec-reational facilities common walls , attached housing developments, and infrastructuresuch as streets mailboxes, sidewalks, and parking lots.

    Annual general meetings must be held within six (6) months of the end of the condocorporations fiscal year to ensure that unit owners have a chance to review the finan-cial statements in a timely manner.

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    Assessment Fees

    Assessment fees include monthly payments made to a condominium association consisting of

    shared fees and services for the property. They are legal expenses for a judgment against the

    homeowners association. Expenses include the need to repair from a natural disaster, or to

    make improvements or services. Such fees and services include building insurance, building

    maintenance, utility service, water service, and trash removal. When considering the purchase a

    condominium, it is important to include this fee in addition to your mortgage as a fixed ex-


    Special Assessments

    In addition to assessment fees , special assessments are additional emergency funds paid by unit

    owners. Theses funds are held in a separate account by the condominium association to pay for

    emergency maintenance, repairs, and other services. Such situations include, the immediate

    need for a new boiler or new roof. Prior to choosing a condominium, it is wise to ask when the

    last time large repairs where made to a complex as well as how high or low the reserves fund is.

    Reserves include the amount of money placed aside in the event a large purchase needs to be

    made towards the maintenance or repair of the complex. In the event of an emergency, individ-

    ual unit owners will have to pay a greater amount of money to fund such unprecedented repairs.

    Assessments and Special Assessment Fees are mandatory upon request

    Assessment Fees

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    How to Purchase a Condominium

    I. Get pre-qualified for a mortgage.

    It is critical to know how much you can afford in

    order to see what property best suits your needs

    financially. It can be very easy to overwhelm

    yourself and convince yourself that you can afford

    a $300,000 mortgage. However, stop, assess the

    situation, and take your time, this will be the

    largest purchase you will be making, therefore

    make sure to take your time and not let anyone rush you into a property you are not

    comfortable with.

    II. Be aware of what is covered by homeowners association insurance.

    In addition to paying assessment fees, find out exactly what is not included in your

    homeowners association insurance. Typically appliances in your unit are not covered

    by the homeowners association insurance.

    III. Review the Covenants, Conditions, and Restrictions.

    Important to understand the terms and responsibilities you are to abide by. Typically

    restrictions such as pets, noise, and parking spaces are disclosed here.

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    IV. Check the Homeowners history of assessments to see how many have been made

    in the last 10 years and how large

    Ask to review when the last repairs for your complex were made. This will serve as a

    good indication as to when a new major repair will have to be made. This information

    will not only help you plan ahead but also help indicate whether or not this complex is

    for you.

    V. Request a market analysis, if working through a realtor

    In order to make sure you are provided the best price and to protect yourself from

    overpriced property, find out the selling prices of condos in the building or area. It is

    also good to find out how fast the condos are increasing in value. If you are planning

    on temporarily staying in this unit, here would be a good indication to start figuring out

    where profit can be made.

    VI Talk to owners in the complex..

    The best source to life in a condo are the actual owners in the complex. People are

    usually willing to tell you their complaints rather than withhold that information.

    Finally once you feel comfortable with all you hear, its time to make an offer and work

    on terms and conditions.


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    Frequently Asked Questions

    ARE THERE SPECIAL MORTGAGES FOR FIRST-TIME HOMEBUYERS? Yes. Lenders now offer several affordable mortgage options which can help first-timehomebuyers overcome obstacles that made purchasing a home difficult in the past. Lendersmay now be able to help borrowers who don't have a lot of money saved for the down pay-ment and closing costs, have no or a poor credit history, have quite a bit of long-term debt,or have experienced income irregularities.


    If interest rates drop significantly, you may want to investigate refinancing. Most expertsagree that if you plan to be in your house for at least 18 months and you can get a rate 2%less than your current one, refinancing is smart. Refinancing may, however, involve payingmany of the same fees paid at the original closing, plus origination and application fees.


    An escrow account is a place to set aside a portion of your monthly mortgage payment tocover annual charges for homeowner's insurance, mortgage insurance (if applicable), and

    property taxes. Escrow accounts are a good idea because they assure money will always beavailable for these payments. If you use an escrow account to pay property tax or home-owner's insurance, make sure you are not penalized for late payments since it is thelender's responsibility to make those payments.


    Complete a loan application. To do so, you'll need the following information.

    Pay stubs for the past 2-3 monthsW-2 forms for the past 2 yearsInformation on long-term debtsRecent bank statementstax returns for the past 2 yearsProof of any other incomeAddress and description of desired propertySales contract

    During the application process, the lender will order a report on your credit history and a professional ap- praisal of the property you want to purchase. The application process typically takes between 1-6 weeks

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    Facing Your Fears

    Granted Interest rates are rising, making one afraid of purchasing now. How-ever, lets not forget what happened in the early 1980s when interest rates

    peaked to 19 % and slowly began to decline to 14% in 1984. Because the mar-ket tends to fluctuate, you want to make sure you do not get fluctuated out of a

    purchasing your home.

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    Real Estate Profiles Affordability of Existing Homes

    Location Single FamilyHomes

    Condominiums IncomeRequired

    Units Sold AverageMedian

    Income (AMI)Level


    2004: $152,910

    2005: $195,370

    2004: $237,670

    2005: $185,094 $52,357 402 80%

    Logan Square2004: $497,871

    2005: $564,388

    2004: $281,675

    2005: $303,214 $109,096 1,816 Over 140%

    South Chicago2004: $100,659

    2005: $130,739

    2004: $95,941

    2005: $90,625

    $34,028 297 Over 140%


    2004: $101,634

    2005: $117,243

    2004: $174,996

    2005: $163,158$35,334 113 50%

    Pilsen2004: $196,281

    2005: $230,825

    2004: $260,133

    2005: $274,258 $69,384 55 100%

    Little Village2004: $159,387

    2005: $207,238

    2004: u/a

    2005: u/a$54,925 210 80%

    Spanish Coalition for Housing

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    Market OverviewSales Price Range Average Days on Mar-


    Less than $149,000 40

    $150,000$199,000 31

    $200,000$249,000 88

    $250,000 $299,000 18

    $300,000$399,000 169

    Demographics Percentage of Population

    White 3.2%

    African American 47.7%

    Hispanic 48.0%

    Asian 0.36%

    Other 0.91%

    Median Income $28,728


    Due to gentrification, the market valuefor property in Humboldt park is nolonger affordable for low-to-moderateincome families. However, because of the dedicated and creative work of stakeholders in the community there areaffordable housing programs which assistthose with lower incomes purchase prop-erty.

    Source: U.S. Census, Record Information


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    Location withinthe city of Chi-cagoLatitude Longitude4157 N 8743.8


    Market Overview

    Source: U.S. Census, Record Information

    Demographics Percentage of Population

    White 26.3%

    African American 5.19%

    Hispanic 65.1%

    Asian 1.31%

    Other 2.13%

    Median Income $36,245

    Sales Price Range Average Days on Market

    Less than $149,000 87

    $200,000$249,000 31

    $250,000 $299,000 93

    $300,000$349,000 76

    $400,000$449,000 33

    $450,000- $ 499,000 70

    $600,000$699,999 56


    If you already own property in thisarea you have experienced or witnessed high appreciation on alltypes of property. In an alreadygrowing and appreciating location,the housing bubble shows no signsof bursting here, due to a largesynergy of people looking to investlong term.


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    Market Overview

    Source: U.S. Census, Record Information

    Demographics Percentage of Population

    White 3.94%

    African American 68.0%

    Hispanic 26.4%

    Asian 0.13%

    Other 1.54%

    Median Income $34,279

    Sales Price Range Average Days on Market

    Less than $149,000 17

    $150,000$199,000 119


    Despite common knowledge, pricesfor single family homes continuedto rise, however, condominium

    prices decreased, thus, creating a buyers market. Although prices for property increased, they continue to be comparably affordable, $130,000for single family homes, and$90,625 for condominiums.


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    Market Overview

    Source: U.S. Census, Record Information

    Demographics Percentage of Population

    White 0.92%

    African American 93.8%

    Hispanic 4.54%

    Asian 0.13%

    Other 0.65%

    Median Income $18,342

    Sales Price Range Average Days on Market

    Less than $149,000 13

    $150,000$199,000 90

    $200,000$249,000 93


    The market here favors property priced under $149,000 taking anaverage of 13 days on the market to

    be sold. Property priced above willexperience a three month averagewaiting period to sell property.However, buyers looking for singlefamily homes in this area can expectincreases in appraised values for their homes, based on last years behavior.


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    Market Overview

    Source: U.S. Census, Record Information

    Demographics Percentage of Population

    White 8.15%

    African American 1.76%

    Hispanic 88.9%

    Asian 0.27%

    Other 0.92%

    Median Income u/a

    Sales Price Range Average Days on Market

    Less than $149,000 16

    $150,000$199,000 42

    $200,000$249,000 45

    $250,000 $299,000 106

    $300,000$399,000 105

    $500,00 $549,000 39


    Pilsen is undergoing rapid develop-ment. Currently many affordablehousing developments are taking

    place to ensure that people with lower incomes can continue to live andthrive in this community. Further-more, Pilsens housing market standsto realize significant appreciation, al-lowing those who own the opportunityto build wealth.


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    The market here greatly favors prop-erty priced under $200,000. If youare looking for a home or condomin-

    ium under $200,000 here is whereyou would be able to find it. How-ever, one must act promptly. Prop-erty in this price range sells fast. In2005, it took a little over a month for

    property priced under $150,000 tosell indicating that this price range isvery desirable and marketable in this

    Market Overview

    Source: U.S. Census, Record Information

    Sales Price Range Average Days on Mar-ket

    Less than $149,000 38

    $150,00$199,99 1

    $200,000$249,999 66

    $250,000$299,999 96

    Demographics Percentage of Population

    White 3.52%

    African American 12.9%

    Hispanic 83%

    Asian 0.13%

    Other 0.41%

    Median Income $32,320


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    Community Land Trusts

    Community Land Trusts (CLT) are private nonprofit corporations. They are created to purchase and hold land for the advancement and affordability of a desired community. Thisis accomplished through providing secure and affordable access to land and housing for community residents. Developments sell the units to low income families who agree to

    purchase under limited sale restrictions. Through this, high quality affordable housing is produced, keeping the property affordable permanently.

    The CLT owns the land and regulates who can purchase the unit at the affordable price.

    Unlike most subsidy programs, the unit will remain permanently affordable, without any timelimits. In addition, when a homeowner decides to move, resale formulas will regulate thesale. Through this the unit will remain affordable to the nextowner, while at the same time ensuring the seller the right torecapture some of the appreciated value of the home.

    Through CLTs homeowners receive all the benefits of owning ahome, an opportunity to profit from appreciated value, security,tax benefits, while paying at a true affordable rate.

    Features of a Community Land Trust

    Dual Ownership. The CLT owns the land, while the homeowner owns the improvements onthe land.

    Leased Land. Through a renewable ground lease, the homeowner owns the unit, granting theuse of the land for 99 years.

    Permanent Affordability. Prior to the owner selling the unit, the CLT must approve the nextowner is of low income through the terms of a ground lease. Further, the sale price isregulated through a resale formula designed to grant the current owner a return on their investment, while keeping the unit affordable.

    Permanent Responsibility. The CLT is allowed to force repairs, cure defaults, and monitor resale, ensuring the interest of a community and property.

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    II. CLT sells you a unit at an Affordable rate,

    III. You own the unit,CLT owns the land


    IV. If you choose to sell,profit will be regulated byresale formula to ensure

    permanent affordability of unit to next owner.

    I. Community LandTrust purchases rightsto land and propertyfrom a community

    Community Land Trust Cycle

    Resale FormulasSubsidy retention programs all use resale formulas to set a future price that will be fair to both the sellinghomeowner as well as retaining the unit affordable for a new buyer. Two of the most popular resale formulasinclude, the Appraisal-based formula and the Index Formula

    I. Appraisal based formula

    Calculates the owners equity by adding onto the homeowners initial investment a certain percentage, usually25% - 50 % maximum, of the appreciated value for every year that a homeowner remains in the CLT unit.The appraisal is however, just for the value of the unit and not the land beneath.

    II. Index Formula

    Adjusts the original purchase price of the home by adding or subtracting predetermined factors that affect thevalue of the homes value. Such factors can include, a deduction for depreciation, penalty for unusual damage,inflation adjustments.

    Spanish Coalition for Housing

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    Affordable Housing Programs

    New Homes for Chicago Now in its eleventh year, the New Homes for Chicago program has ap- proved over 65 developments, or over 1,600 new affordable single fam-ily homes or two-flat homes, or condominiums which are either com-

    pleted or in process throughout Chicago. Prices under this program are$155,000 for single family homes or condos and $200,000 for two-flats.

    Chicago Partnership for Affordable Neighborhoods (CPAN)

    CPAN is a partnership between the City of Chicago and developers to ensure opportunities for affordable condominiums in market rate developments, particularly in appreciating neighbor-hoods, through two steps: developer write-down and purchase price assistance to homebuyers.

    Eligible homebuyers are first-time buyers (have not owned a home within the last three years) with in-comes up to 100% of median (see table for maximum household incomes by family size). Purchase priceassistance may be available for households with incomes up to 80% of median, who demonstrate a gap

    between the amount of the first mortgage they can secure, and the affordable sales price. Purchase priceassistance is in the form of a deferred loan at 0% interest, which is reduced on an annual pro rata basis.

    Public Safety Officer Homeownership Incentive Program

    Chicago police officers, firefighters, and paramedics (referred to here as "public safety officers") who pur-chase homes in targeted areas of Chicago may be eligible to receive $3,000 in down payment and closingcosts assistance. If the purchase is located in a CHA Redevelopment Property (defined as a residential de-velopment constructed as part of the CHA Plan for Transformation, as designated by the Chicago HousingAuthority), $7,500 in assistance may be available.

    The deferred loan is available per household and may be used for a down payment or closing costs, in-cluding title insurance; credit reports; recording fees; appraisals; points; transfer stamps; third-party prop-erty inspection fees; first year's payment of mortgage insurance; and other customary bank related closingcharges. This loan will be fully forgiven if the officer resides in the home for at least five years.

    Teacher Housing Resource Center

    In an effort to attract and retain the best and brightest teachers to live in Chicago, Mayor Richard M.Daley created the Teacher Housing Resource Center (THRC). THRC provides comprehensive services for teachers that includes homeownership education, down-payment assistance, assistance with finding ahome mortgage and special discounts especially for teachers in new residential developments and rehabs.

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    American Fact Finder. 2006. 22 June 2006. US Census Bureau.http://factfinder.census.gov/home

    Chicago Area Housing. 2006. Chicago Housing and Community Development. 18July 2006. http://www.chicagohousing.com/HomePage.asp

    Chicago Fact Finder. 2006. University of Notre Dame. 18 July 2006.http://www.nd.edu/~chifacts.

    Community Land Trusts. 2006. Policy Link. 18 July 2006.http://www.policylink.org.

    Department of Housing. 2006. City of Chicago. 25 July 2006.http://gov.cityofchicago.org

    Multiple Listing Service of Northern Illinois, Inc. 2006.http://mlsni.net/

    Mortgage Indexes: Historical Data. 14 June 2006. Mortgage-x Information Services.http://mortgage-x.com/general/indexes/default.asp

    Home Buyer Assistance. 2006 City of Chicago. 31 July 2006.http://gov.cityofchicago.org.

    Home and Communities. 4 August 2006. US Department of Housing and Urban Devel-opment. http://www.hud.gov/faqs/faqhomebuy.cfm

    US Census Record Information. 20 July 2006. US Census Bureau.http://factfinder.census.gov/servlet/

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    Special Thanks


    Homeownership continues to serves as the most viable and secure way to buildwealth today. However, as much as we hear this, we convince ourselves that rightnow, we are not ready. Consider reflecting on your spending habits and ability tosave...have you been able to curb your habits to save more? Or do you continuallyfind yourself pushing your deadline of purchasing a home another year. Rather than planning on saving and take the initiative. Explore the possibilities of

    Affordable Housing . Here, you can establish the forced savings you always planned for, but never followed. Build the foundation towards a better quality of life you always dreamt of but never acted on.

    Created by Ulises RuelasHomebuyer Information

    Spanish Coalition for Housing

    4037 W. North AveChicago, IL. 60639

    Phone : 773.342.7575Fax : 342.8528

    For a copy of Guide to Affordable Homeownership Optionse-mail request to [email protected]

    [email protected] com

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