Morgage brokers can be great at finding a loan to get you into a house. It may not be the best loan, and they certainly charge some pretty good fees, but after you make the loan and get into the house you’ll get approximately 3 offers to refinance a week from various companies, making it easy to shop for a refinance after a year or so.
-lv
Offhand, I’d say that borrowing against retirement monies to buy a home can be a good move. You may be sapping your retirement, but you’re also buying a home…in thirty years that place is yours, home free; no more rent ever. Stocks usually appreciate (even better than real estate, historically), but a home is forever, and the “forced savings” of mortgage payments can be quite helpful, and the deduction of interest is great. A big lump of cash is good for retirement, but rent payments never end; mortgage payments do. You would have to run the figures for your actual situation, this is just my guess.
So you may have a bit less for retirement, but you also have a home of your own and nothing to pay but maintence and taxes (though don’t discount those). Also, theoretically your home will be increasing in value all those years, and in addition to interest you pay, you pay off the loan, which gives you a decent chunk of equity. The reason I would have for buying now rather than living frugally for a few years and saving money for a down payment is that interest rates are at 30-year lows. They will probably rise in a few years…probably not hugely, don’t panic, but they will likely rise.
Negatives: you should be prepared to stay in one place for three - five years (depending on appreciation), at least until property values increase enough that you could sell your place if you had to and deduct broker commissions and still not lose money. DON’T buy a place and plan to move in two years. You can’t move on a whim if you have a house, renting out your place can be quite a bit of trouble. Also, if you slack on mortgage payments it is a much bigger deal than missing rent payments…you could lose your home. :eek:
Buying now or soon looks like a good idea to me with interest rates the way they are, as long as you buy a good place in a good neighborhood, and don’t plan to have to move soon. Buy “Homebuying for Dummies”, despite the name is is quite useful. And may I recommend lovely Edgewater? We are gentrifying happily and you have resturants, Starbucks and the lake. 
I am quite happy in my place here (Edgewater condo owner).
I used a mortgage broker, mostly since I did not have the time to spend to shop around, and I was borrowing right up against my upper limit of what I could manage and felt I could not be guaranteed a loan at the average bank. I can give you his name if you like. I am refinancing now, which while actually more effort than my original close should hopefully go well and give me an even lower payment.
Out of curiosity, I looked up the maximum FHA loan amounts for Illinois. Apparently, you can’t link to the results page, but if you go here, you can just plop in Illinois in the State dropdown box and hit Send.
Cook County, which I believe is a large part of the city of Chicago, has a maximum loan amount of $234,150.
HTH 
Here are some other links you might want to browse:
Housing & Urban Development - Illinois - this page is the HUD page specific to IL, it has some homebuying information and also has links to FHA information.
Illinois Housing Development Authority - this site says that there are homebuyer programs in IL that can get you a rate of 5.75% with no points. Maximum household income is $90,480 and maximum purchase price is $243,500.