It's a common problem. A buyer is ready to move-up to a larger home, but the earnest money needed for the purchase is tied up in the equity of their current home. Though they might not be aware of it, buyers in this situation have a source of cash to tap into - an equity-advance loan.

Evanston-based Winthrop Properties and MidAmerica Bank have developed a program that allows buyers in need of funds for a down payment to borrow up to 95 percent of the equity built up in their current home. The buyer can then use that money to purchase a new condominium at One One One Morgan, a 166-unit, new-construction loft development by Winthrop Properties.

Located at the corner of Morgan and Adams streets in the West Loop, One One One Morgan offers 41 floor plans with one to two bedrooms plus den, one to two baths and 680 to 1,535 square feet. A three-bedroom, 2,376-square-foot duplex penthouse is also available. Base prices range from $189,900 to $475,000, and the penthouse is priced at $726,000. Deeded, indoor parking is $25,000 per space.

"In order to purchase their first home, many buyers sink the bulk of their savings into the down payment," said Bob Horner, co-principal of Winthrop Properties. "A couple of years later these buyers can afford a larger mortgage payment, but obtaining the cash needed for earnest money can present a real challenge."

The home-equity program leverages the homeowner's original down payment, as well as any appreciation, toward the purchase of a new residence. And, according to Horner, that appreciation can be substantial for buyers throughout Chicago.
For example, if someone purchased a $200,000 home in Chicago three years ago, then, assuming a conservative appreciation rate of 8 percent per year, that person's current home would be worth $252,000. If that buyer made a down payment of 10 percent ($20,000), then he or she would have $72,000 in equity, and could access 95 percent of that amount ($68,000) through this loan program.

"Someone, who may have previously thought they didn't have earnest money, now has $68,000 to use toward a home at One One One Morgan," said Horner. "Most of the buyers who will take advantage of this program have realized significant appreciation, and won't have to borrow anywhere near the 95-percent maximum."

In addition to providing the necessary funds for a move-up home purchase, the program has several advantages, according to Chester Bell, MidAmerica Bank loan officer.

Because the loan is a demand note, buyers pay no interest on the loan until the first house is sold or paid off, noted Bell. Any interest paid at that point is generally tax-deductible. Also, there are no lender fees or closing costs associated with the program.

The most notable benefit is the program's interest rate, according to Bell.

"The interest rate on this loan is tied to the current prime rate," said Bell. "And, because prime is so low, there really hasn't been a better time to move-up to a larger home. With this program, many buyers will be able to do just that."

To take advantage of the program, buyers at One One One Morgan must obtain end-loan financing through MidAmerica Bank. Loans must be secured by a principal dwelling located in MidAmerica Bank's lending area, and property insurance is required.

One One One Morgan highlights the new-construction-loft concept with exposed ductwork, 10-foot ceilings, open floor plans and private balconies.

Standard features include hardwood flooring in living areas and kitchens, carpeting in bedrooms, ventless gas fireplaces, individual heat and air conditioning, and track lighting.

Kitchens have 42-inch upper cabinets, Italian granite countertops, a 21-cubic-foot refrigerator, self-cleaning gas range, microwave and dishwasher.

Baths have ceramic-tile flooring, tub and shower surrounds, full-width vanity mirrors, single-lever chrome faucets, and 5-foot soaking tubs in master baths.

Building amenities include a 24-hour doorman, individual unit storage, a marble-tiled lobby, high-speed elevators, and a high-rise fire protection system.

The sales center for One One One Morgan is located at the Southeast corner of Morgan and Jackson, two blocks west of Halsted. It features a decorated kitchen/living room vignette and scale model of the building.

To reach the sales center, take Interstate 90/94 to Adams Street, go west on Adams to Morgan, turn left on Morgan and continue south for one block. Sales hours are from 11 a.m. to 6 p.m. daily. For more information, call (312) 421-0111 or visit www.111morgan.com.

Winthrop Properties is a joint enterprise of developers Bob Horner and Ibrahim Shihadeh. Horner and Shihadeh share more than 40 years of real estate experience, during which time they have built and sold more than 5,000 homes.

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